Puerto Rico regulators have issued a cease and desist order to a bank owned by bitcoin critic Peter Schiff, which has been the subject of an international investigation for tax evasion and money laundering.
The news prompted a quick reaction from some members of the bitcoin community, who took the opportunity to remind the old enemy of the limitations of traditional finance while welcoming BTC’s censorship-resistant credentials.
Puerto Rico’s Office of the Commissioner of Financial Institutions has ordered the closure of San Juan-based international bank Euro Pacific due to allegations of insolvency and a lack of compliance and internal controls, according to the Washington Post. .
In 2020, a group of tax authorities called the Joint Chief of Global Tax Enforcement, or J5, began investigating Schiff’s bank “to put an end to the alleged facilitation of offshore tax evasion and money laundering by the bank”.
The governments of the United States, Australia, United Kingdom, Canada and the Netherlands created the J5 in 2018 to combat international financial crimes involving tax evasion and money laundering.
Regulator: Euro Pacific has a history of non-compliance
“Euro Pacific has a long history of non-compliance,” said Natalia Zequeira Díaz, Puerto Rico’s regulator commissioner.
She added that the Bureau “would not allow or condone any financial entity with a license issued by the government of Puerto Rico to operate outside the law or ignore the clear mandates of applicable laws and regulations.”
The cease and desist order reportedly said Euro Pacific suffered a net loss of approximately $751,000 in 2019 and accumulated nearly $4 million in total losses. He added that at the end of 2020, the bank had negative capital of $1.3 million:
“As such, the entity is classified as insolvent,” the order reads. Euro Pacific recorded a net loss of about $550,000 in the first three months of this year, he said. Following the order, customers lost access to their accounts and withdrawals were halted.
Peter Schiff denies the bank is insolvent
Schiff founded Euro Pacific Bank in 2011, establishing subsidiaries in the Caribbean, and reportedly grew to 15,000 accounts within two years of starting operations. Six years later, the bank received a license in the US territory of Puerto Rico and settled there.
But deposits plummeted to $150 million following the J5 probe and customers left. Writing on Twitter, Schiff refuse the bank was insolvent. “He has more than enough cash to pay every depositor in full tomorrow,” he claimed, adding:
“The bank itself has no debt. But regulators won’t allow anyone to withdraw funds at this time. The lengthy investigation exonerated the bank.
Earlier, Schiff said he invested $7 million of his own money in Euro Pacific, but the Puerto Rico regulator told him the money was not part of the institution’s capital.
The economist revealed he brokered a deal to sell the bank to a Houston-based entity for $24 million – a plan rejected by the regulator.
“The only explanation is that the IRS and J5 blocked the sale, so they could use my bank’s closure as a successful example of their crackdown on money laundering and tax evasion, even though their own investigation proved that the bank did nothing to facilitate any financial crimes,” he complained.
The closure of Schiff’s bank invites ridicule
In cryptocurrency circles, Peter Schiff is known for his harsh criticism of bitcoin (BTC). In one of its many reviews, the gold bug said that bitcoin fails both as money and as a store of value because it lacks utility and intrinsic value.
Reacting to the Euro Pacific Bank shutdown, several members of the Bitcoin community took the opportunity to mock Schiff over his past and uncharitable comments about crypto. They also touted bitcoin’s credentials as a censorship-resistant currency that can solve problems unwanted government interference.
“The karma gods of bitcoin slaughtered Peter Schiff’s company,” Max Keiser, a popular bitcoin proponent, despised. “I told him to buy bitcoin at $1, $10, $100, $1000 – He never even spent 10 minutes studying it. Now he will pay the price.
Twitter user Darshan Ashok shouted, “This is the punishment you deserve for all the shouting about BTC.”
“I should have bought bitcoin grandpa,” said another.
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