The US Department of Justice has hit cryptocurrency-money transmitter platform Payza with a lawsuit. Founders, Canadian brothers Firoz Patel and Ferhan Patel, are accused of laundering more than $250 million. The pair are alleged to have conducted Ponzi schemes, pyramid schemes and child pornography rings.
The indictment against Payza was issued by a federal grand jury in the District of Columbia. According to court documents, Ferhan Patel was arrested in Detroit on March 18 and will be transported to Washington D.C.
“The arrest and indictments in this case demonstrate that we will vigorously enforce laws meant to protect the American consumer,” said U.S. Attorney Jessie K. Liu. “Money transmitting businesses are required to be registered federally and licensed in most states and jurisdictions, including the District of Columbia. Consumers should beware of those that do not follow these laws because they could be acting as a cover for other illegal activity.”
The lawsuit, first filed on November 3, 2016, was released just a day after Payza announced the inclusion of Dash on its platform.
The lawsuit also states that criminal activities at Payza have been ongoing since 2012, and that the brothers failed to obtain the necessary state licenses to operate as a money transmitting business and failed to heed cease-and-desist orders issued in the US.
Although the indictment did not mention cryptocurrencies, Payza has over 16 million customers. While the DOJ commandeered Payza.com, the company moved its online portal to Payza.eu and issued a statement via Twitter that they are coping with legal woes.
As some of you may be aware of already, Payza is currently dealing with some legal matters in the United States. We cannot give any specific details at this time, but please be aware that this is an accusation and it is NOT evidence of guilt.
— Payza (@Payzaofficial) March 22, 2018
The DOJ is directing all inquiries to USADC.OBOPAYZA@usdoj.gov. Messages should include include your name, email address and contact information. They intend to respond to all inquiries within 5 business days.