Regulators in Puerto Rico 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 over tax evasion and money laundering.
The news provoked a sharp reaction from some members of the bitcoin community, who took the opportunity to remind the old nemesis of the limitations of traditional finance while worrying about BTC’s censorship-resistant credentials.
According to The Washington Post, Puerto Rico’s Office of the Commissioner for Financial Institutions ordered the closure of San Juan-based Euro Pacific International Bank over allegations of bankruptcy and lack of compliance and internal controls.
In 2020, a group of tax officials launched an investigation into Schiff’s bank, calling the Joint Chiefs of Global Tax Enforcement, or J5, “to prevent suspected facilitation of offshore tax evasion and money laundering by the bank.”
The governments of the US, Australia, UK, Canada and the Netherlands created 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,” Natalia Zequeira Diaz, a commissioner for the Puerto Rico regulator, was quoted as saying.
He added that the office “will not permit or tolerate any financial entity with a license issued by the government of Puerto Rico to operate outside the law or to disregard the express mandate of applicable laws and regulations.”
The cease-fire order reportedly stated that Euro Pacific suffered a net loss of approximately $751,000 in 2019 and approximately $4 million in total losses. It said that at the end of 2020, the bank had a negative capital of $1.3 million:
“As such, the entity is classified as insolvent,” the order said. Euro Pacific had a net loss of about $550,000 during the first three months of this year. Following the order, customers have lost access to their accounts and withdrawals are stopped.
Peter Schiff denies bank bankruptcy
Schiff founded Euro Pacific Bank in 2011, established subsidiaries in the Caribbean, and reportedly hit 15,000 accounts within two years of starting operations. Six years later, the bank licensed and moved to the US territory of Puerto Rico.
But after the J5 investigation, the deposit was reduced to $150 million and the customer left. Writing on Twitter, Schiff denied The bank had gone bankrupt. “Every depositor has more than enough cash to pay him in full yesterday,” he claimed.
“The bank itself does not have any loans. But the regulator will not allow anyone to withdraw funds for the time being. The lengthy investigation acquitted the bank.”
Earlier, Schiff had said that he had invested $7 million of his own money in Euro Pacific, but the Puerto Rico regulator told him that the money was not part of the institution’s capital.
The Economist revealed they negotiated a deal to sell the bank to the Houston-based entity for $24 million — a plan the regulator turned down.
“The only explanation is that the IRS and J5 blocked the sale, so they can use closing my bank as a successful example of their crackdown on money laundering and tax evasion, even if proven by their own investigation.” That the bank did nothing to facilitate any financial crime,” 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 bug stated that bitcoin fails as both money and a store of value because it lacks utility and intrinsic value.
Reacting to the closure of the Euro Pacific Bank, many members of the bitcoin community took the opportunity to poke fun at Schiff over his previous ungodly comments on crypto. He also stated the credentials of bitcoin as a censorship-resistant currency. can fix issues Due to unwanted government interference.
“The Bitcoin Karma Gods Have Killed Peter Schiff’s Business,” said Max Keizer, a popular bitcoin proponent. humiliated, “I told him to buy bitcoin at $1, $10, $100, $1,000 – he never took 10 minutes to study it. Now he will pay the price.”
Twitter user Darshan Ashok shouted: “This is the punishment you deserve to shout about BTC.”
“Should bitcoin grandpa buy it,” said another.