A complaint for forfeiture filed in January, which Fintech Business Weekly first examined, describes the several million dollars that were seized at Evolve Bank and Trust in connection with a number of fraudulent activities, such as money laundering and crypto-based pig-butchering.
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According to the complaint, Paralel Design Limited, Gatcha Pictures Limited, and Bytechip LLC conspired to launder money through a connected scheme. Specifically, they are accused of accepting money from fraudulent activities such as pig-butchering and cryptocurrency investment schemes.
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“26 Chinese nationals who allegedly reside in California, New York, and various regions throughout China” is how the group behind the operation is described in the filing. They “all appear to be conspiring together to orchestrate fraud scams,” according to the statement. In the document, a US Secret Service agent explains these accusations.
Banking as a Service (BaaS) products from Evolve Bank and Trust allow other businesses to create “vAccounts” at Evolve for their customers. These fraudulent companies allegedly opened vAccounts at Wise, Airwallex, Mercury, Relay, and Solidfi, among other platforms. All of these Money Service Businesses (MSBs) have contractual agreements with EB&T for BaaS.
On the same day as the forfeiture complaint, ByteChip LLC filed a lawsuit against Solid referring to the company as “a leading neobank” that offers “Banking-as-a-Service” products among other things. The lawsuit explains how ByteChip entered into a contract with Solid and created a virtual bank account with Solid, where money was kept in trust and at Evolve Bank. ByteChip asserts that it processed its clients’ money using the account as a master account.
Eventually, Evolve froze the money connected to Gatcha, ByteChip, and another company named Rinotech, citing “unsatisfactory banking practices.”
To be clear, ByteChip supplied services to its clients, who were purportedly fraudsters; Evolve supplied services to Solid; and Solid supplied services to ByteChip.
The agent looking into the fraud was informed by an Evolve investigator that they calculated the overall exposure in Evolve’s virtual accounts to be more than $15 million.
BlockFi’s credit card was issued by Evolve, which also supplied FTX customers with certain accounts and was mentioned in FTX’s bankruptcy. “We do not lend against cryptocurrency, we do not provide cryptocurrency custodial services, we do not trade cryptocurrency, and we do not hold any form of cryptocurrency on our balance sheet,” Evolve said at the time. Furthermore, neither Evolve nor we have ever invested in or transacted in cryptocurrency.
“At the time of FTX’s bankruptcy filing, Evolution was in the process of terminating our relationship with them,” they went on. To be clear, neither Evolve nor its affiliates received a loan from us, and we do not maintain corporate or deposit accounts with any of them. Once more, Evolve neither invests in nor has ever transacted in cryptocurrency.
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