QuadrigaCX Had €400 Million Seized By Polish Authorities in 2018 For Money Laundering - Connections With Columbian Cartel

Introduction

In order to understand the full background behind why it can be said definitively that QuadrigaCX had one of their bank accounts raided in 2018 by Polish authorities for money laundering and involvement with criminal organizations (such as the Columbian Cartel).

Enter Crypto Capital Co.

This portion of the report contains a considerable amount of information about a (somewhat) obscure payment processor called, Crypto Capital Corp.

Relevance to This Report

The company, Crypto Capital Co., is significant for the following reasons (among others):

  • They are the fundamental link between QuadrigaCX and all other entities involved.
  • Crypto Capital Co. was effectively the premier entity responsible for the management of any and all money going to and from QuadrigaCX.
  • Crypto Capital Co. provides a definitive tie between QuadrigaCX and Bitfinex. The importance of this link will explained further on.

Who/What is Crypto Capital Corp.?

The name Crypto Capital Corp. refers to a payment processor that works specifically with cryptocurrency exchanges.

Their website can be accessed at: Cryptocapital.co

Their role as an organization, specifically, is to provide fiat liquidity for exchanges. They are responsible for maintaining customer funds in bank accounts that they source for exchanges, and they are responsible for providing withdrawals to those clients as well.

In specific, the author of this report wrote about this company several months ago on October 6th, 2018 for BitcoinExchangeGuide:

[Crypto Investor Warning]: The Implications of Bitfinex Exchange's Insolvency

The author also wrote a lengthy report about the organization on January 30th, 2019, for the same publication:

Cryptocapital.Co May Be Crypto’s Black Swan

Both reports provide better insight into why Crypto Capital Co. deserves greater scrutiny. Some of those issues will be shelled out in greater detail in this report as well.

Exchanges Represented by Crypto Capital Co.

Below is a screenshot from Crypto Capital Co.’s website, noting the exchanges that have elected to use Crypto Capital Co.’s services:

If readers visit the site now, however, they will notice that the exchange ‘Bitfinex’ is now missing from these group of exchanges.

As covered in one of the Bitcoinexchangeguide pieces written by the author, this removal occurred as the author was divulging details about the website to the broader community on social media:

This is corroborated by a screen capture of the Google webcached image of the webpage immediately after the deletion took place:

Crypto Capital Co. and QuadrigaCX

Readers that have either visited the site or have read the article directly probably observed the appearance of ‘QuadrigaCX’ on the site’s list of supported exchanges.

However, what is more notable is the fate of the other exchanges that have been represented by Crypto Capital Co.

Below are a list of bullet-point events that have affected the related exchanges:

  • QuadrigaCX’s website mysteriously went down for maintenance toward the end of January (January 28th), after months of user complaints about the exchange's failure to fulfill withdrawals requests that had been placed on the exchange.
  • CEX.io’s status page is showing that there are no withdrawal options available on the site currently. Though they claim they are ‘working on it’, there is no timetable for the return of these features. All of the withdrawal degradations on CEX.io’s site occurred within a week of QuadrigaCX’s site going down.
  • Coinapult’s website shutdown on December 10th, citing a ‘temporary’ maintenance issue. It has not opened since and there is no timetable on its return.
  • Exmo still remains relatively under the radar. The exchange’s volume is minimal at best and there is absolutely no community discussion about the exchange. In fact, chatter about the exchange is so low at this point, that there are no verified stories about anyone even interacting with it in 2018 or 2019. It appears that the exchange was sold in late 2018.
  • Bitfinex has failed to honor customer withdrawal requests for months, and the litany of verified complaints are now numbering in the hundreds. And those are just the stories that we’re hearing about. There may perhaps be dozens or hundreds more that have been unable to receive a withdrawal from Bitfinex.

Evidence Attesting to the Failure of the Exchanges Listed Above

#1 QuadrigaCX

This one goes without saying.

#2 Bitfinex

Since late August 2018, Bitfinex’s subreddit has been inundated with customer complaints regarding a failure on the behalf of Bitfinex to honor withdrawal requests.

The following screenshots, which were taken from Bitfinex’s Reddit recently, show that customers are still anxiously awaiting their withdrawals from the exchange:

The above two images are just a small sample of the litany of complaints about Bitfinex that have littered its Reddit for the past 4–5 months.

Scores of customers have reported similar stories of never receiving their wire transfers after waiting months.

For those that are skeptical of the veracity of these posts, its worth noting that the subreddit’s moderator, a Bitfinex employee that goes by the username, ‘garbis_bitfinex’, has been consistently answering many of these posts with confirmation of the existence of the poster’s ticket number and the status of their complaint.

Below is an example:

This issue was also covered by the author several months ago and widely reported by reputable crypto publications such as CoinDesk and CoinTelegraph.

#3 — CEX.io

As it stands, every fiat withdrawal option on CEX’s website has been downgraded.

Source: https://cexio.statuspage.io/

#4 — Coinapult

Coinapult’s website went down on December 10th, 2018. Since the update on their website stating that they were ‘pausing’ services, they have yet to go live again since their initial outage:

Its worth noting that the date Coinapult put this notice on their website is the day after Gerry Cotten’s death (QuadrigaCX reported on January 15th, 2019, that CEO Gerry Cotten passed away on December 9th, 2018).

This, obviously, is not evidence of any correlation between the two — but it is worth observing.

#5 — EXMO

This exchange may be most known for the reported kidnapping of its CEO, Pavel Lerner in late 2017. Pavel Lerner, a Russian native, was kidnapped in Kiev, Ukraine after a ‘black Mercedes Benz’ suddenly pulled up in front of Lerner as he was leaving a building, and abducted him.

Pavel was eventually returned safely after paying a $1 million ransom in bitcoins, but the perpetrators were never caught and no further information about the crime was ever given.

In terms of the exchange’s solvency, there is little to no information about its functionality given its low volume. However, the ‘ANN’ thread [ANN short for Announcement] on ‘Bitcointalk’ is littered with hundreds of customer complaints about not receiving their withdrawals.

The official ‘EXMO’ account (validated by Bitcointalk), has validated the responses by replying to them in kind and even updating users on the status of their withdrawals. In addition, many have posted transaction details, banking deposit/withdraw information, chat logs with the ‘EXMO’ team, and other information that strongly validates the veracity of their claims.

What is ‘Bitcointalk’?

For those that visited the website and were tempted to look at it with incredulity, it is worth noting that the website was co-founded by Satoshi Nakamoto, the pseudonymous inventor of Bitcoin itself. It is the oldest and longest-lasting pillar of the crypto community and several high profile members of the community such as Daniel Larimer, Jeff Garzik, Gavin Andresen, and others have been active on the website at various times.

It is almost impossible to launch a successful project in the cryptocurrency space without posting an ANN thread on Bitcointalk. It is almost tradition at this point.

Given the above information, it is also notable that the ‘EXMO’ account is labeled with a ‘Warning: Trade with extreme caution!’

  • Every exchange is either completely defunct (i.e., QuadrigaCX and Coinapult) or there are a litany of customers that are not receiving any of their withdrawals. In the case of CEX.io, their website outright states that they are unable to fulfill USD withdrawals of any sort and even some crypto deposits are unavailable for some reason.
  • Before QuadrigaCX announced their insolvency, there were mass reports by customers that they had not received their funds from the exchange.
  • Almost all of the above exchanges (with the exception of EXMO as it has been having withdrawal issues throughout all of 2018) started experiencing these issues in Q4 2018.

Now that we have the necessary background information on Crypto Capital Co., we can proceed to dissect what exactly happened in 2018 when a Polish bank account was raided by authorities.

QuadrigaCX's Polish Bank Account Raided By Polish Authorities in 2018 – Over 400 Million Euros Seized

In April 2018, CoinTelegraph broke a story regarding a raid conducted by the Polish government of one of its banks:

While the title states, ‘unconfirmed’, the part of this story that was unconfirmed was whether this bank account was/is tied to Bitfinex.

This was done, more than likely, due to legal concerns (i.e., to avoid being sued since the title suggests ‘fraud’ specifically).

What’s interesting to note in the CoinTelegraph article are the following statements:

  • “ Prosecutors are said to be investigating accounts linked to two companies. One is registered in the vicinity of Pruszków, and is said to be headed by someone of Canadian-Panamanian descent. The second company is allegedly presided over by a man with Colombian and Panamanian citizenships. Both companies are said to have over 1.27 bln PLN ($371 mln) deposited on their accounts.”
  • “ It is this second account that is reported to be tied to Bitfinex. In late 2017, documents posted online appeared to show Bitfinex directing its customers to an account at the Cooperative Bank in Skierniewice, as Bloomberg reported.”
  • “ Today’s reports in Polish media raised the suspicion that there is a connection between Panama registered Crypto sp z o.o (and parent company Crypto Capital Corp.) and narcotics trafficking networks, suggesting that the criminals converted fiat into crypto to cover their tracks.”
  • “ On Polish forum Bitcoin.pl, one Bitfinex user has claimed he was interrogated by Polish police last week: ‘I testified as a witness regarding the case of Crypto sp z o.o because they sent me money from Bitfinex and their accounts were blocked.’”

Obviously, the above information is significant, if true, but it begs more clarification and exposition before making any definitive assumption.

Although the forum post was made before the actual news released, more definitive information must be ascertained from the situation before any conclusions can be made.

Visiting the Original Article (from Poland)

The link to the original article can be found here (Google Translate Must Be Used):

https://www.tvp.info/36692986/kolumbijskie-kartele-praly-setki-milionow-przez-spolki-z-pruszkowa-i-okolic

The source, which is ‘tvp.info’, is a government-owned and controlled media source in Poland, according to Wikipedia:

https://en.wikipedia.org/wiki/TVP_Info

Here Are the Important Takeaways From the Polish [Source] Article:

a. “A billion PLN 270 million taken over in March by the CBSP prosecutor’s office is most likely the money belonging to Colombian drug cartels — according to informer tvp.info.”

b. “It is known that the money was on the accounts of two companies from the vicinity of Pruszkow, owned by a Canadian-born Panamanian descent and a Colombian with Panama citizenship. One of these companies was a shareholder of an online cryptocurrency exchange office. Millions of such operations were to flow through a small cooperative bank in Lodz.”

c. Later in the article it states, “While checking the connections of this company [the company that they described as a shareholder of an online cryptocurrency exchange office], investigators came across another company C. At its head stood a man with citizenship of Colombia and panama. This, in turn, the company was associated with a large online cantor exchange of cryptocurrencies.”

d. “Investigators determined that both companies did not actually carry out any economic activity. They were created solely to share your [probably a mistranslation of ‘your’, I think they meant ‘their’] bank accounts with international criminal financial operations.”

Objective Evidence That Bitfinex, CEX.IO and QuadrigaCX Used the Crypto ZO.O.O Bank Account

Before presenting evidence that conclusively identifies the bank account is the one in question in the Polish raid, let’s go ahead and look at the evidence that QuadrigaCX, Bitfinex, and CEX.io (all members of Crypto Capital Co), were all accepting deposits to this bank account.

Evidence That QuadrigaCX Used the Crypto SP ZO.O.O Bank Account

QuadrigaCX USD deposit directs to a different bank address than stated from QuadrigaCX

In the post above, a user notes how they found it odd that QuadrigaCX, a Canadian exchange, would be directing them to deposit their money in a Canadian account.

One reply to the comment gives specific details about Quadriga’s banking:

Despite the fact that the source is Reddit, the date of the post adds significant validity to the accuracy. The comment is dated August 16th, 2017, which is well before there were any widespread questions about QuadrigaCX, banking/withdrawal issues, account freezes, and almost a full calendar year before the seizure of the Polish accounts.

QuadrigaCX Evidence Pt. 2:

https://www.reddit.com/r/QuadrigaCX/comments/7fz2m4/quadrigacx_canadian_exchange_please_clarify/

The above post was made by a user on the social media site, Reddit, on November 27th, 2017. Again, this was well before the banking issues, CIBC freezing of funds, or the Polish bank raid.

This was posted in the r/QuadrigaCX subreddit, which was created by QuadrigaCX directly.

To add even more validity to the above post, a spokesperson from an official QuadrigaCX account (which moderated the QuadrigaCX subreddit) affirmed the details posted by the user above.

The ‘QuadrigaCX’ moderator account replied to the user’s original post by stating:

QuadrigaCX, the company, also commented on another Reddit post where a user had concerns about their banking in Poland by stating this:

Source: https://www.reddit.com/r/QuadrigaCX/comments/8bc63f/is_quadrigacx_connected_to_bitfinex_and_money/

Evidence That Bitfinex Used the Crypto ZO.O.O Owned Bank Account For Deposits

The first, and most credible piece of evidence attesting to the fact that Bitfinex was using this bank account stems from an article published in November 2017 by the publication, ‘Trustnodes’.

Bitfinex Reveals a New Polish Bank Account Under a Panama Registered Company

This, in conjunction with a slew of posts on the internet (in 2017, well before this Polish account was subject to any serious public scrutiny), provide significant, verifiable evidence that Bitfinex was also using this account.

The article also contains a screenshot of bank wire information being given to a Bitfinex customer that shows this bank account as well. So, the evidence is more than definitive here.

Evidence That CEX.io Used the Crypto ZO.O.O Owned Bank Account For Deposits

In the same article published by Trustnodes, there is an actual screenshot of the Crypto SP ZO.O.O bank account information being displayed directly on CEX.io’s website.

Evidence Tying the Crypto SP ZO.O.O Bank Account to the Polish Raid

Upon first look, it seems like the connection being made between this bank account and the Polish bank account is speculative.

However, upon closer inspection, it becomes immediately clear that this could not be further from the truth.

While the TVP report did not explicitly cite the company’s name, there is enough evidence to make a definitive connection.

Examining Crypto SP ZO.O.O

In order to gain more insight into the company that opened up this bank account in Poland, records were obtained by the author from Poland.

The obtained document is linked above.

The owner of the company is listed as ‘Ivan Manuel Molina Lee’.

Independent research conducted by Bloomberg confirmed that ‘Ivan Manuel Molina Lee’ is a Canadian.

https://www.bloomberg.com/news/articles/2018-05-24/bitfinex-said-to-find-bank-in-puerto-rico-after-wells-fargo-exit

Crypto Capital Co. holds 99% of all shares in Crypto SP ZO.O.O per the report obtained from Poland on the company:

Corporate records show that Ivan Manuel Molina Lee is also director of Crypto Capital Co. in Panama.

https://opencorporates.com/officers/277019976

Examining the Bank Account Specifically

The bank details for the Polish bank account owned by Crypto SP ZO.O.O are as follows:

Bank Name: Bank Spoldzielczy w Skierniewicach Address: ul.Reymonta 25, Skierniewice 96–100, Poland Swift code: poluplpr

There are a few facts that we can confirm about this bank, which are:

  • The bank is a ‘Cooperative Bank’.
  • The bank was managing less than $10 million worth in assets before Bitfinex, QuadrigaCX, and CEX.io all began banking there.
  • The bank is located in ‘Lodz’ [Lodzkowski], which is definitely in the vicinity of Pruszkow.

Comparing What We Know With the Polish Media Report (Government-Owned Source)

Below, is a list of facts that allow us to be almost certain that the bank account that was raided in Poland was CRYPTO SP ZO.O.O:

  1. The Polish report stated that the account was owned by a company headed that starts with ‘C’. Crypto SP ZO.O.O. starts with a ‘C’ (in both Polish and English).
  2. The Polish report stated that the company that held the account at the bank was headed by someone with Canadian and Panamanian citizenship. We know that Ivan Manuel Molina Lee, the head of Crypto Capital Co., was a Canadian with Panamanian citizenship, per the Bloomberg report.
  3. The Polish report determined that the bank in question that was raided was a small cooperative bank. We know that ‘ Bank Spółdzielczy w Skierniewicach’ was a small cooperative bank.
  4. The Polish report stated that the bank was a small cooperative bank in Lodz, specifically. Using the confirmed banking information for the Polish bank that Bitfinex, CEX.io, and QuadrigaCX had customers deposit money to, we can confirm the bank was in this location as well. This information can be verified at this link: https://www.bisnode.pl/firma/?id=712240&nazwa=BANK_SPOLDZIELCZY_W_SKIERNIEWICACH. The specific location of the bank was “Ul. Reymonta 25 96–100 Skierniewice, województwo ŁÓDZKIE”. Google Map results place it within the vicinity of Pruszkow as well.
  5. The Polish report states that the account was related specifically to cryptocurrency. There is no doubt that Crypto SP ZO.O.O is absolutely related to cryptocurrency (we’ve confirmed all Crypto Capital Co. related exchanges were depositing money there).

Additional Information:

Crypto SP ZO.O was founded in September of 2016. There are no financial records for the company as they have never filed any. They sold 99% of their shares to Crypto Capital Co. for 9000 PLN, which amounts to roughly $1.7k. The town/area that the bank account is located in houses roughly 10k-15k people, which qualifies it as a meager village.

An actual picture of the general area where this account is registered; Source: https://mapio.net/a/94948632/

Given all of the above information, it is almost implausible to suggest that the account in question would belong to another entity.

There are certain, unique factors that the CRYPTO SP ZO.O.O bank account and the Polish bank account have in common that seem to be far beyond simple coincidence.

Namely:

  • There is probably no other instance on planet earth where an individual with dual citizenship in Canada and Panama operates a Polish bank account on behalf of cryptocurrency exchanges.
  • There is more than likely no other instance where the above is true on top of the fact that the bank account is located in the same 30 to 40 mile radius in a small Polish town with a population of less than 15,000 people.
  • The above two bullet points notwithstanding, there is more than likely no other entity in the crypto space that would also have nearly half a billion dollars stuffed in a Polish account that is owned by a guy with dual citizenship in Panama and Canada.

Given the above bullet points, it can be asserted 100% that the account that was raided in Poland belonged to Crypto SP ZO.O.O. We can confirm this bank account was owned by QuadrigaCX by referring to statements made by their own team, customers of the exchange, and independent research.

However, we can also confirm that Bitfinex, CEX.io and Coinapult used this bank account as well.

So the question becomes – how big is this entire scheme?


BEG does not take sides in this matter but does support our team members and their individual perspectives and findings. Please reach out regarding any issues or concerns addressed in the authors research.

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1 COMMENT

  1. title is very incorrect? quadriga didn’t have 400m euros seized. Crypto Capital did. And Quadriga is just 1 of multiple clients of Crypto Capital

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