After five years of legal action, Reggie Fowler received a prison sentence for crypto shadow banking.
Reggie Fowler, once part owner of the Minnesota Vikings national football league (NFL) team, has received a six-year jail sentence for serving as an illicit "shadow bank" to the cryptocurrency industry.
The authorities found that during ten months in 2018, Fowler processed transactions worth over $700 million without proper regulatory oversight.
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Fowler, now 63, faced a lengthy legal proceeding that spanned five years, beginning with his arrest in 2019. The man was accused of participating in shadow banking, an illegal activity performed by non-banking entities. Fowler initially pleaded not guilty in 2020 but later changed his stance, admitting guilt in April 2022.
Fowler's sentence, 75 months for bank fraud and money laundering charges, was delivered by the US Attorney's Office in New York. In his public comments, US Attorney Damian Williams explained Fowler's method of deception:
Reginald Fowler evaded federal law by processing hundreds of millions of dollars of unregulated transactions on behalf of cryptocurrency exchanges as a shadow bank. He did so by lying to legitimate US financial institutions, which exposed the US financial system to serious risk.
In addition to these allegations, Fowler is accused of deceiving the Alliance of American Football (AAF) by misrepresenting his financial worth to acquire a significant stake in the organization.
To achieve this level of deception, in early 2018, Fowler founded Global Trading Solutions (GTS). The company worked in conjunction with Crypto Capital and other crypto entities based in Israel. Utilizing a web of deceit, Fowler and GTS bypassed the required licensing and lied to financial institutions to open accounts for processing cryptocurrency transactions. As Attorney Williams detailed:
At no point were FOWLER, GTS, nor any of the Crypto Companies ever licensed as a money transmitting business in the United States, as required by federal law.
Among the implicated crypto companies was iFinex Inc, the parent company of Bitfinex and Tether.
Alongside his prison sentence, Fowler has been mandated to forfeit $740 million and make restitution of over $53 million to the AAF. The conviction serves as a stark reminder of the risks associated with shadow banking in the crypto industry and the legal repercussions of such activities.
In other developments, a former Coinbase product manager was sentenced to 2 years in prison for insider trading.
