Puerto Rican regulators have filed a cease-and-desist order to a bank owned by bitcoin critic Peter Schiff, which is under investigation internationally for tax evasion and money laundering.
Some members of the bitcoin community reacted quickly to the news, reminding Peter Schiff of the limitations of traditional finance while gloating about BTC’s censorship-resistant credentials.
According to The Washington Post, Puerto Rico’s Office of the Commissioner of Financial Institutions ordered the closure of San Juan-based Euro Pacific International Bank due to claims of insolvency and a lack of compliance and internal controls.
In 2020, the Joints Chiefs of Global Tax Enforcement, or J5, launched an investigation against Schiff’s bank “to put a stop to the bank’s suspected facilitation of offshore tax evasion and money laundering.”
The J5 was formed in 2018 by the governments of the United States, Australia, the United Kingdom, Canada, and the Netherlands to tackle international financial crimes such as tax evasion and money laundering.
“Euro Pacific has a long history of noncompliance,” said Natalia Zequeira Daz, a commissioner with Puerto Rico’s regulator.
She went on to say 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.”
According to the cease-and-desist order, Euro Pacific had a net loss of around $751,000 in 2019 and total losses of about $4 million. It also said that the bank had negative capital of $1.3 million by the end of 2020:
“As such, the entity is classified as insolvent,” according to the order. Euro Pacific reported a net loss of around $550,000 in the first three months of this year. Clients have lost access to their accounts as a result of the injunction, and withdrawals have been blocked.
Peter Schiff established the Euro Pacific Bank in 2011, with subsidiaries across the Caribbean, and reportedly had 15,000 customers within two years of operations. Six years later, the bank was granted a license in the United States territory of Puerto Rico and relocated there.
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