Deltec Bank’s funds seized by US Secret Service in money laundering and fraud probe

Deltec Bank's funds seized by US Secret Service in money laundering and fraud probe

The Dark Side of Blockchain: Unveiling the International Fraud Scheme

Source: Pexels

The cryptocurrency industry, known for its decentralized and secure nature, has unfortunately become a breeding ground for fraudulent activities. Recent events have shed light on the dark side of blockchain technology, with the U.S. Secret Service seizing multiple corporate accounts controlled by Deltec Bank, a Bahamian bank with ties to crypto-related firms.

Unveiling the Seizures

According to newly unsealed documents in a federal court, the U.S. authorities seized several U.S. bank accounts controlled by Deltec Bank last month. The total amount seized exceeds $58 million. These seizures were part of an investigation into organized, international criminal money laundering syndicates operating cryptocurrency investment and wire fraud scams.

The bank accounts that were seized by the U.S. Secret Service were custodial accounts with Mitsubushi Bank UFJ Trust in New York, opened by Deltec on behalf of corporate clients. These accounts were linked to certain Bahamian bank customers who were associated with shell firms involved in a cross-border scheme.

The Cross-Border Fraud Scheme

The international fraud scheme involved the creation of fake crypto websites, which were used to deceive victims into depositing their assets or cash. These websites promised substantial returns on investments and displayed increasing account balances to encourage further deposits. However, victims were unable to withdraw their funds from these fraudulent platforms.

U.S. law enforcement agencies have identified at least 74 shell companies involved in this scheme. Funds linked to these shell companies were traced before being transferred to accounts in the Bahamas. The Secret Service discovered that these companies received wire fraud proceeds and then transmitted them to other accounts in the Bahamas, utilizing intricate wire transfer structures to evade scrutiny.

Identifying the Culprits

Mitsubushi Bank flagged the accounts associated with Axis DigitalLimited and GTAL, two shell companies, as they were unable to obtain information on these companies from the Bahamian bank. U.S. officials claim that banks operating in the United States are required to gather “Know Your Customer” (KYC) information for account opening. However, in this case, the registered agents, business locations, and business purposes of Axis DigitalLimited and GTAL could not be identified.

It is worth noting that this case highlights the importance of KYC regulations and the need for thorough due diligence when dealing with cryptocurrency investments. The lack of transparency in the blockchain industry makes it susceptible to fraudulent activities, and regulatory measures are crucial in combating such schemes.


While blockchain technology offers immense potential, it is essential to acknowledge the dark side of the industry. The recent seizure of Deltec Bank’s accounts reveals the existence of an international fraud scheme that exploits unsuspecting investors. As the blockchain industry continues to evolve, it is imperative for regulators and industry participants to work together to establish robust security measures and enforce stringent KYC regulations.

By doing so, we can protect both the integrity of the blockchain and the interests of investors, ensuring that the benefits of this transformative technology are not overshadowed by illicit activities.