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Bitfinex Files Subpoena to Recover $850M in Frozen Bank Accounts

Bitfinex, a prominent bitcoin exchange, has filed an application to subpoena a former bank executive in an attempt to recover millions of dollars in frozen funds. 

Bitfinex filed its application on October 18, 2019, with a district court in the state of California. In this motion, Bitfinex singles out the bank TCA Bancorp’s former vice president, Rondell “Rhon” Clyde Monroe. In addition to Monroe’s testimony, Bitfinex is seeking a documented list of all of Monroe’s former communications with payment processor Crypto Capital.

Bitfinex and Crypto Capital have a complicated history. In April 2019, Bifinex faced legal action from the New York Attorney General’s Office over the allegation that Bitfinex was using $850 million acquired from Tether (which is owned by the same parent company, iFinex) to mask losses. 

In its recent subpoena application, Bitfinex claims that these losses were the result of theft or criminal mismanagement by Crypto Capital. Without signing a formal agreement, Bitfinex entrusted $880 million with Crypto Capital and since then has been unable to access it. In a bid to avoid disclosing these difficulties to its users, Bitfinex initiated the scheme to “borrow” money from Tether.

The Purpose of the Subpoena

In October 2019, a group of Bitfinex investors formed a class action lawsuit against the company for this alleged cover-up, collectively seeking a whopping $1.4 trillion in damages. That suit is ongoing.

The goal of Bitfinex’s new subpoena, as part of a bid to recover these missing funds, is to try and prove its theory that Monroe used his position at TCA Bancorp to transfer Bitfinex’s money away from Crypto Capital. The subpoena application alleges that Crypto Capital told Bitfinex that the funds were being “held up” by foreign regulators in Portugal, Poland and the U.K. in April 2018 and that the company has not seen the funds since. 

Bitfinex is pursuing the subpoena in an effort to track these funds.

“Thus, in order to demonstrate Applicant’s ownership of and entitlement to the various funds being held in Poland, Portugal, and the United Kingdom, Applicant must be able to trace the funds deposited by its customers through the fund transfers between and among the various banking accounts operated or used by Crypto Capital,” the subpoena application reads.

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