- Regulators in Puerto Rico issued a cease-and-desist order to a bank that is owned by bitcoin critic Peter Schiff
- BTC Price at the time of writing – $19,988.88
- The bank has been under probe over allegations of tax evasion and money laundering
The news provoked a swift reaction from some members of the bitcoin community, who took the opportunity to remind the old nemesis of the limits of traditional finance while gloating about BTC’s censorship-resistant credentials.
Puerto Rico’s Office of the Commissioner of Financial Institutions ordered the shut down of San Juan-based Euro Pacific International Bank over allegations of insolvency and a lack of compliance and internal controls, according to The Washington Post.
In 2020, a group of tax authorities called the Joints Chief of Global Tax Enforcement, or J5 began investigating Schiff’s bank to put a stop to the suspected facilitation of offshore tax evasion and money laundering by the bank.
Euro Pacific has a history of non-compliance
The governments of the U.S., Australia, the U.K., Canada, and the Netherlands created the J5 in 2018 to combat international financial crimes involving tax evasion and money laundering.
Euro Pacific has a long history of noncompliance, Natalia Zequeira Díaz, a commissioner with the Puerto Rico regulator, was quoted as saying.
She added 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.
The cease-and-desist order reportedly stated that Euro Pacific had a net loss of about $751,000 in 2019 and amassed almost $4 million in total losses. It added that at the end of 2020, the bank had negative capital of $1.3 million:
As such, the entity is classified as insolvent, the order stated. Euro Pacific had a net loss of roughly $550,000 during the first three months of this year, it said. Following the order, clients have lost access to their accounts and withdrawals have been halted.
Schiff founded the Euro Pacific Bank in 2011, establishing subsidiaries in the Caribbean, and reportedly hit 15,000 accounts within two years of starting operations. Six years later, the bank received a license in the U.S. territory of Puerto Rico and moved there.
But deposits have slumped to $150 million in the wake of the J5 probe and customers have left. Writing on Twitter, Schiff denied the bank was insolvent.
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 said that bitcoin fails as both money and a store of value because it lacked utility and intrinsic value.
Reacting to Euro Pacific Bank’s closure, several members of the bitcoin community took the opportunity to mock Schiff over his past uncharitable comments on crypto. They also touted bitcoin’s credentials as a censorship-resistant currency that can fix issues of unwanted government interference.