Crypto fraudster could spend seven years in prison for allegedly running a shadow bank

Crypto fraudster could spend seven years in prison for allegedly running a shadow bank

Damian Williams, the U.S. Attorney for the Southern District of New York, has requested a seven-year prison sentence for Reginald Fowler, the alleged executive in a crypto shadow banking operation that operated in 2018.

According to a statement dated 18submissionFowler's trial has dragged on for five years and he is scheduled to be sentenced on April 20.

US attorney calls for seven-year prison sentence for the defendant

In a letter to U.S. District Judge Andrew Carter, Williams explained that Fowler was arrested in 2019 and charged with illegal money transfers, bank fraud and conspiracy related to shadow banking practices in the unlicensed money transfer business.

Shadow banks refer to a group of unlicensed and unregulated bank-like entities that offer similar services to traditional commercial banks. They offer many services, mainly loans, and are called non-bank financial intermediaries.

Williams isseekthe seven-year prison sentence on behalf of the government. He also called for a range of 15 to 20 years to show the seriousness of the offense and the need to promote respect for the law.

Fowler's shadow banking case

In 2018, Fowler launched Global Trading Solutions (GTS) under the umbrella of overseas-based Crypto Capital Corp, an alleged crypto shadow bank. They collectively acted as an unlicensed money transfer company that provided crypto exchanges with inappropriate access to the U.S. banking system.

Between February and October 2018, GTS and Crypto Capital processed approximately $750 million in crypto transactions with multiple firms, including Bitfinex, Binance, CEX.io and QuadrigaCX. Fowler is alleged to have deceived these financial institutions and allowed criminals to launder their funds through his platform.

Additionally, Fowler defrauded an emerging soccer league – The Alliance of American Football (AAF) – by falsely representing the source of his wealth in order to acquire an ownership interest in the club. Ultimately, the defendant failed to make scheduled payments to AAF, leading the league to bankruptcy less than a year later.

Although Fowler was released on $5 million bail after pleading not guilty to all charges filed against him in 2020, he changed his plea to guilty in 2022. As FowlercondemnationAs the case nears, Williams also wants a $53 million restitution order to AAF's trustee and a forfeiture of $740 million.

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