Crypto Exchange Bitfinex Denies Connections With Colombian Drug Operations

Crime, News | April 11, 2018 By:

Crypto exchange Bitfinex has denied any connection to the funds seized by Polish prosecutors.

Last week, authorities in Poland seized 1.27 billion Polish zlotys ($371M USD) from two bank accounts, which are allegedly affiliated with “a large online exchange of cryptocurrencies.” The accounts are registered at the Cooperative Bank in Skierniewice. The investigation is allegedly tied to Colombian drug cartel operations.

The confiscated funds has been taken from two companies registered in Pruszków, a city in central Poland. One is owned by a Canadian of Panamanian descent (“company M”) and the other by a Colombian with Panamanian citizenship (“company C”). Company M allegedly defrauded the Belgian Ministry of Foreign Affairs for more than €400,000 ($490,00 USD), while the ministry was constructing an embassy in the Democratic Republic of Congo.

According to the investigation, company M was associated with company C, and that company C was, in turn, associated with an unnamed cryptocurrency exchange. Polish investigators said that the companies are not actual businesses. These companies only exist to launder money for funding international crime – more specifically, the Colombian drug trade.

In addition to the sum confiscated from the companies, 9.5 million zlotys denominated in various currencies was secured by Polish prosecutors from a wider network of related firms.

“The money probably comes from international drug trafficking, as well as large-scale fraud,” said Zbigniew Ziobro, Prosecutor General. “It was deposited at a branch of one of the banks in the accounts of two companies registered in Poland.”

Spider’s Web, a popular tech publication in Poland, pointed the finger directly at Bitfinex, citing “unofficial information.” The publication claimed that Skierniewice’s Cooperative Bank is the same bank to which Bitfinex directed customers to for exchange-related deposits as recently as 2017.

One Bitfinex user on Polish forum Bitcoin.pl claimed that he was interrogated by Polish police: “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.”

Crypto sp z o.o is the parent company of Crypto Capital Corp – which is registered in Panama. There has been a long-lasting suspicion that the company is associated with narco-trafficking networks where criminals convert their fiat into cryptocurrencies and become virtually untraceable by law enforcement agencies.

Currently, no charges have been filed. Polish prosecutors were reportedly awaiting cooperation with both Europol and Interpol due to the international nature of the allegations.

On Tuesday, Bitfinex denied the allegations, saying that “it conducted an internal investigation of its international organization,” and found no connection between its operations and the two accused companies.

“Among the claims under dispute, Bitfinex has not been party to any official investigation launched in any jurisdiction globally on the basis of the allegations reported in the Polish media,” the exchange said in a statement. “This signals that the relevant authorities have found no reason to act upon the claims made against the Bitfinex platform.”

In December 2017, BitFinex, as well as its sister company Tether, received subpoenas from US regulators for undisclosed reasons. Tether has come under fire for concerns that it has been operating a fractional reserve and is covering over its reserve deficit in complicity with Bitfinex.