Cryptocurrency exchange Bitfinex has filed an application for discovery with a California district court as part of an attempt to subpoena a former banking executive of a trust company. According to an October 18 filing, Bitfinex believes that the subpoena could help it to recover $850 million in frozen funds. The application for discovery was accompanied by a second declaratory filing by Giancarlo Devasini, the chief financial officer of iFinex Inc., Bitfinex’ parent company.
Specifically, the subpoena is seeking to obtain the deposition testimony of Rondell “Rhon” Clyde Monroe, a former vice president of TCA Bancorp, as well as documentation of Monroe’s communication with staff at Zug-based payment processor Crypto Capital. Notably, Crypto Capital was also associated with troubled cryptocurrency exchange QuadrigaCX before its shutdown earlier this year.
In the filing, Bitfinex claims that Crypto Capital “has used one or more accounts held at TCA Bancorp to facilitate the transfer of funds” that belong to the exchange. Bitifnex believes that Monroe has access to information and documents proving that $850 million of Bitfinex’s money is still locked away.
A report by The Block explained that “the application by iFinex, a British Virgin Islands corporation, is made under 28 U.S.C. §1782(a), a federal law that can be used to allow discovery tools in U.S. courts to aid with non-U.S. litigation,” Thus, the application, if approved, would allow for a deposition and document production in foreign cases described therein.”
This filing is reportedly only the latest part of Bitfinex’s ongoing initiative to recover $880 million that were held at Crypto Capital when the payment processor was seized by authorities in Poland in April of last year as part of a money-laundering investigation.
Monroe allegedly signed a letter guaranteeing the account balance of a company that Crypto Capital claims to be associated with
Bitfinex alleges that Crypto Capital originally informed the exchange that $500 million of its funds were being “held up” by regulators in Poland and Portugal also during April of 2018. The filing says that before that point, Bitfinex’s “relationship with crypto capital generally operated well.”
After Crypto Capital informed Bitifnex of the frozen funds, the filing says that “one of Crypto Capital’s principals, Oz ‘Joseph,’ repeatedly reassured [Bitfinex] that its funds held in Poland and Portugal were on the verge of being released and that Crypto Capital was working diligently with local authorities to secure their release.”
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By December 2018, Bitfinex has evidence that Crypto Capital has lost control of an additional $304M. Ultimately, the seized and lost funds total $880 Millions. https://t.co/2C4GTTtEna
— EastMother (@EastMother) October 21, 2019
Bitfinex claims that after it pressured Crypto Capital to provide more information concerning the bank accounts and the frozen assets, Crypto Capital presented a customer-requested reference letter that said that $304 million were held by an account allegedly associated with Crypto Capital–a letter that was signed by Monroe.
In the letter, $300 million of Bitfinex’s funds were said to be held at TCA on behalf of Global Trade Solutions AG (GTS), one of the bank’s clients. “The letter… identifies TCA Bancorp’s customer as ‘G.T.S. Resources Limited’ and not Crypto Capital or any other entity related to Crypto Capital of which [Bitfinex] was aware.”
‘Until [Bitfinex] received the Reference Letter, it was unaware of G.T.S. Resources Limited or its relationship to Crypto Capital.’
Bitfinex still embroiled in NYAG case
Bitfinex is also currently being investigated by the New York Attorney General’s Office based on claims that the exchange used an $850 million loan from stablecoin issuer Tether, the exchange’s sister company, to cover up losses.
Bitfinex and Tether, which are both operated by iFinex Inc., attempted to bring the NYAG’s proceedings to a halt in August by filing a lack-of-jurisdiction claim. The claim was denied.
It is not yet clear if Bitfinex’s attempts to subpoena Monroe are linked to the NYAG case.