Last Updated on April 20, 2023 by Bitfinsider

Former minority owner of the Minnesota Vikings of the National Football League, who admitted to running a cryptocurrency shadow bank that misappropriated $850 million in customer funds it was holding for the Bitfinex exchange, is now facing a seven-year jail sentence from U.S. federal authorities.

When it was discovered that Bitfinex was providing loans to Tether as reserve backing for its stablecoin rather than actual currency, the gap in its financial records sparked controversy.

Reginald Fowler, the owner of Crypto Capital, is the target of prosecutors’ ire in particular because, they claim, in February, while he was awaiting sentencing, he went on a wild gambling binge and lost more than $200,000 in Arizona casinos, despite the fact that he still owes his former company partners $53 million.

Today will see Fowler’s sentencing. Prosecutors outline an incredible scheme that Fowler tried to carry out even after being made aware that he was under investigation in their letter to the judge seeking for a prison term.

Prosecutors claim that despite lacking a banking license, Fowler gave illegal access to American banks to cryptocurrency exchanges like Bitfinex, Binance, CEX.io, and QuadrigaCX. On allegations of conspiring to conduct bank fraud, wire fraud, and running an unregistered money transmission business, he was indicted in 2019.

In addition, $53 million in compensation is being sought by the prosecution for the defendant’s part in the collapse of the Alliance of American Football, a brand-new football league. They assert that Fowler broke both of the pledges he made to them—a $53 million investment and a $120 million line of credit—which ultimately caused the collapse of the league.

Additionally, they demand the return of $740 million in funds that were sent through Crypto Capital on behalf of its exchange customers. They are asking Fowler for $793 million in all, although it is unlikely that they would ever receive it. But the most peculiar aspect of the case might be Fowler’s actions while being investigated.

According to court documents submitted by the prosecution, he was apprehended in 2016 at the Canadian border while carrying materials frequently used in a “black money scam.” It’s unclear exactly what Fowler intended to do, but a “black money scam” often entails persuading a fall guy to take a stash of banknotes that appear to have ink stains on them, as though they were taken in a heist that included a dye pack. The con artist is promised the newly cleansed riches if they can clean the notes with a special chemical. The notes are bogus, of course.

When the FBI raided his residence two years later, they discovered $14,000 worth of fake currency. Fowler filed a shaky document to the court after being indicted in the Crypto Capital case that attempted to prove he held a money transferring license from a “free industrial zone” in the Republic of Georgia. It was from a time after he was charged.

Fowler seemed to have gone on a gambling binge as his sentence date drew nearer, the prosecution said the judge: “The government has obtained records from a casino company in Arizona that indicate that during the pendency of the defendant’s criminal case, he has gambled hundreds of thousands of dollars. This gambling continued after his plea, and records the government has obtained from the company indicate that the defendant has continued to gamble until at least February 7, 2023, spending at least $200,000 in the period from October 3, 2022 until that date.”

“Every dollar the defendant has risked at these casinos is a dollar less likely to be paid to victims in restitution, and to the government in forfeiture. The government therefore respectfully requests that the court add a bail condition that bars the defendant from gambling.” Later, Fowler consented to being barred from entering casinos.

Fowler claims he currently lacks money, bank accounts, and legal representation. His previous attorney resigned due to unpaid bills.

“I have used all my assets. I put my properties up for bail. I can’t get a bank account. We don’t have any income. We can’t get to the assets. In a November court hearing, Fowler stated,  I want to find a firm that understands that.”