Bitfinex, one of the leading firms in the cryptocurrency market, was allegedly deceived by Crypto Capital Corp (CCC), a shadow bank. In a letter submitted to the court, the lawyers of Bitfinex declared the company as a victim of the criminal scheme of Fowler, a principal of CCC, and requested restitution for the losses worth 385.5 million USD.

Bitfinex alleged that CCC deceived them with misleading statements about its compliance, fiduciary responsibilities, and legal status. CCC stated that they performed comprehensive know-your-customer (KYC) checks and gave Bitfinex the impression that the shadow bank was in open communication with banks about their business nature. The company, however, would later find out that their representations were deceptive.

In October 2018, Bitfinex had to project caution to its customers that disclosing the banking platform they are using could "damage the entire digital token ecosystem". Despite this, informed authorities that they had been possibly misled in December 2018. Bitfinex forewarned of the "serious negative effects" that could arise if the banking platform became known.

In addition to the deceptive representations, Bitfinex also revealed that CCC had promised to take its fiduciary responsibilities "as seriously" as the cryptocurrency firm. With all these activities, Bitfinex's confidence in Crypto Capital Corp dropped and at the end of November 2018, Bitfinex suspected of being lied to.

To conceal the losses, it also became known that Bitfinex had borrowed 400 million USD from their subsidiary, a stablecoin tether, without any knowledge to their customers. Furthermore, in a criminal referral sent to the Justice Department, Bitfinex reported the alleged fraud.

The sentencing of Fowler was scheduled to take place on April 20 after a delay was denied but the judge, who heard from one victim, adjourned the hearing. At the time of writing, there are still two fugitives charged alongside Fowler, Oz and Ravid Yosef.

Bitfinex, a cryptocurrency firm, is taking legal action seeking restitution of 385.5 million USD against Crypto Capital Corp (CCC) for their alleged deceptive practices. It is claimed that CCC made false representations about their compliance and fiduciary measures, with Bitfinex only noticing that it was being misled from the end of November 2018. To try and control the losses, Bitfinex is believed to have borrowed 400 million USD from their stablecoin tether subsidiary without any customers knowledge.

A criminal referral was made to the Justice Department due to the suspected fraud carried out. Sentencing for Fowler was appointed for April 20 but the hearing was adjourned after the judge had heard from one victim. At the time of writing, Oz and Ravid Yosef remain fugitives who were charged with Fowler.

Bitfinex is relentless in its pursuit of CCC to cover the costs they incurred in the process of the misrepresentation. Despite the potential risks arising from obtaining the banking platform, Bitfinex continues to make catastrophic losses but attempts to stay financially afloat by borrowing money from their tether subsidiary. As the investigation continues, it is yet to be seen how successful Bitfinex will be in obtaining the restitution they seek.



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