Bitfinex’s exchange parent company, iFinex Inc, recently filed a discovery application in South Carolina’s District Court in a dispute over its $880 million funds held by Crypto Capital.
The past year’s regulatory pressures have been a big challenge to crypto players and now trickle-down effects are being experienced within the digital asset economy. Crypto Capital which was mandated to handle Bitfinex’s funds and transactions to surpass various barriers claims the funds have been frozen since December 2018.
According to the filings, Bitfinex wants access to documents that prove its contractual agreement with Crypto Capital. The British Islands based firm further intends to leverage U.S litigation to get the deposition documents through the standard discovery avenues to access its $880 million.
Reports by Bitfinex on the issue highlight that the funds are held up in U.K, U.S.A, Poland and Portugal bank accounts. As it stands, Bitfinex is a target of the New York Attorney general office on allegations of non-disclosure of information. The crypto consortium allegedly borrowed money from a sister company to meet its liquidity needs without informing it's clients of the regulatory risks which currently have its funds frozen.
This situation between Bitfinex and Crypto Capital had been a good business relationship that only turned sour in April 2018 following an asset freeze in Poland for money laundering investigations. Crypto Capital’s association with Reginald Fowler also triggered reaction from authorities given he is under investigation for bank related fraud. Bitfinex defended its due diligence noting that they had been unaware of this relationship until the end of 2018.
The discovery will target access to Crypto Capital bank accounts’ information. So far, Bitfinex has identified big players like Citi, HSBC, Bank of America and Well Fargo among the key intermediaries whose account information can help trace the funds held in the U.K, Portugal and Poland.