Bitcoin critic Peter Schiff’s bank closed due to alleged tax evasion, money laundering

Puerto Rican regulators have issued a stop-and-give order to a bank owned by bitcoin critic Peter Schiff, which has been the subject of an international investigation into tax evasion and money laundering.

The news provoked a quick reaction from some members of the bitcoin community, who took the opportunity to remind the old nemesis of the limits of traditional finance while enjoying BTC’s censorship-resistant credentials.

Puerto Rico’s office of the commissioner of financial institutions ordered the closure of the San Juan-based Euro Pacific International Bank due to allegations of insolvency and non-compliance and internal control, according to The Washington Post.

In 2020, a group of tax authorities called the Joints Chief of Global Tax Enforcement, or J5, began investigating Schiff’s bank “to stop the suspected facilitation of offshore tax evasion and money laundering by the bank”.

Authorities in the United States, Australia, the United Kingdom, Canada and the Netherlands set up J5 in 2018 to combat international economic crime 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, a commissioner at the Puerto Rico regulator.

She added that the office would not “allow or tolerate 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 allegedly stated that Euro Pacific had a net loss of around $ 751,000 in 2019 and accumulated almost $ 4 million in total losses. It added that by the end of 2020, the bank had negative capital of $ 1.3 million:

“As such, the unit is classified as insolvent,” the order states. Euro Pacific had a net loss of around $ 550,000 during the first three months of this year, it says. Following the order, customers have lost access to their accounts and withdrawals have been stopped.

Peter Schiff denies that the bank is insolvent

Schiff founded Euro Pacific Bank in 2011, and established subsidiaries in the Caribbean, and reportedly hit 15,000 accounts within two years of launch. Six years later, the bank received a license in the US territory of Puerto Rico and moved there.

But deposits have dropped to $ 150 million in the wake of the J5 probe, and customers have left. Writing on Twitter, Schiff denied the bank was insolvent. “It has more than enough cash on hand to pay each depositor in full tomorrow,” he claimed, adding:

“The bank itself has no debt. But regulators will not allow anyone to withdraw money at the moment. The lengthy investigation released the bank. “

Schiff previously said he invested $ 7 million of his own money in Euro Pacific, but the Puerto Rican regulator told him the money was not part of the institution’s capital.

The economist revealed that he was negotiating an agreement to sell the bank to a Houston-based unit for 24 million dollars – a plan rejected by the regulator.

“The only explanation is that the tax authorities and J5 blocked the sale so that they could use the closure of my bank as a successful example of their repression of money laundering and tax evasion, even though their own investigation showed that the bank did nothing to ease any financial crimes. », He complained.

Schiff’s bank closure invites ridicule

In cryptocurrency circles, Peter Schiff is known for his harsh criticism of bitcoin (BTC). In one of his many criticisms, the gold standard said that bitcoin fails as both money and value storage because it lacked utility and intrinsic value.

In response to the closure of the Euro Pacific Bank, several members of the bitcoin community took the opportunity to mock Schiff over his previously unsavory comments about crypto. They also identified bitcoin’s credentials as a censorship-resistant currency can fix problems of unwanted government interference.

“Bitcoin karma gods have slaughtered Peter Schiff’s business,” Max Keizer, a popular bitcoin advocate, despised. “I asked him to buy bitcoin for $ 1, $ 10, $ 100, $ 1000 – he did not even spend 10 minutes studying it. Now he has to pay the price.”

Twitter user Darshan Ashok shouted, “This is the punishment you deserve for all the shouting about BTC.”

“Should have bought bitcoin grandfather,” said another.

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