Regulators in Puerto Rico have issued an injunction to a bank owned by Bitcoin critic Peter Schiff. An international investigation into tax evasion and money laundering was already underway in advance.
A reaction from the Bitcoin community to the bank’s closure came quickly: some members took the opportunity to remind Schiff of the limitations of traditional finance. The triumph was also accompanied by joy over the censorship resistance of the Bitcoin network.
According to the Washington Post, the Financial Regulator of Puerto Rico ordered the closure of the San Juan-based Euro Pacific International Bank. The reasons for this are alleged insolvency, lack of compliance and internal controls.
In 2020, a group of tax authorities named J5 (Joint Chief of Global Tax Enforcement) began investigating Schiff’s Bank. The goal was, “to put an end to the alleged aid to offshore tax evasion and money laundering by the bank“. The governments of the USA, Australia, Great Britain, Canada and the Netherlands established the J5 in 2018 to combat international financial crimes such as tax evasion and money laundering.
Supervisory authority: the Euro Pacific has committed many administrative offenses
“Euro Pacific has committed many administrative offenses,” said Natalia Zequeira Díaz, a commissioner of the supervisory authority in Puerto Rico.
Furthermore, Díaz said “it is neither permitted nor tolerated for a financial company to operate outside the law with a license issued by the Puerto Rican government. The clear requirements of the applicable laws and regulations must not be ignored”.
The injunction states that in 2019, Euro Pacific recorded a net loss of about $ 751,000 and a total loss of almost $ 4 million. The commissioner of the supervisory authority added that at the end of 2020 the bank had a negative capital of $ 1.3 million:
“Therefore, the company is classified as insolvent,” the order says. Euro Pacific apparently had a net loss of around $550,000 in the first three months of this year. As a result of the order, customers’ access to their accounts was blocked and withdrawals were stopped.
Peter Schiff denies bankruptcy of the bank
Schiff founded Euro Pacific Bank in 2011 together with subsidiaries in the Caribbean. According to some reports, the financial institution had over 15,000 accounts within two years of starting operations. Six years later, the bank received a license for the US territory of Puerto Rico and moved there.
But as a result of the J5 investigation, deposits have collapsed to $ 150 million, and customers have left the bank. On Twitter, Schiff denied that the bank was insolvent. “The bank has more than enough cash on hand to pay out every depositor in full tomorrow,” he claimed, adding:
“The bank itself has no debts. But the regulatory authorities at the moment do not allow anyone to withdraw money. Although the results of the long investigation relieve the bank.”
Earlier, Schiff stated that he had invested $ 7 million of his own money in Euro Pacific, but the Puerto Rico regulator told him that the money did not belong to the capital of the institution.
The economist stated that he had negotiated a deal to sell the bank to a Houston-based company for $ 24 million. However, the regulator rejected this plan.
Puerto Rico put my bank into receivership due to “insolvency.” The bank has no debt, no loans, and enough cash to fully cover all deposits. A qualified buyer is offering me $17.5 million for the bank, plus $7 million in new capital. Who pays $24.5 million for an insolvent bank?
– Peter Schiff (@PeterSchiff) July 5, 2022
“The tax office and the J5 have probably blocked the sale in order to use the closure of my bank as a successful example of their action against money laundering and tax evasion. I can’t explain the whole thing any other way. After all, the results of their own investigation prove that the bank did not favor financial crime,” Schiff complained.
The closure of Schiff’s Bank attracts ridicule
In cryptocurrency circles, Peter Schiff is known for his harsh criticism of Bitcoin. In one of his many reviews, the gold fan said that Bitcoin is failing both as money and as a store of value. BTC lacks utility and inherent value.
Several members of the Bitcoin community used the closure of Euro Pacific Bank as an opportunity to make fun of Schiff and the derogatory comments about cryptocurrencies. Some stressed that Bitcoin is resistant to censorship and can solve problems with unwanted government intervention.
“The Bitcoin Karma Gods Slaughtered Peter Schiff’s Business“, sneered the popular Bitcoin proponent Max Keiser. “I told Schiff to buy Bitcoin at $1, $10, $100, and $1,000. Schiff didn’t even take 10 minutes to inform himself. That’s the price of it now.”
Twitter user Darshan Ashok tweeted: “This is the just punishment for all your shouting about BTC.” And – “You should have bought Bitcoin, grandpa,” another said.