BNY Mellon insists it is not OneCoin aider-and-abettor
BNY Mellon has responded to allegations made by victims of fraudulent cryptocurrency scheme OneCoin. The plaintiffs in a lawsuit filed with the New York Southern District Court accuse BNY Mellon of aiding and abetting fraud, as well as of commercial bad faith.
On December 21, 2020, BNY Mellon filed a motion to dismiss the claims against it, arguing that the plaintiffs weakly attempt to convert BNY Mellon from a victim of the OneCoin fraud into an aider-and-abettor.
Let’s recall that this is a class action on behalf of a class of investors consisting of all individuals and entities who transferred to the OneCoin defendants, directly or indirectly, any fiat currency or cryptocurrency to invest in a OneCoin trader/membership package and/or a purported digital cryptocurrency called “OneCoin” and who suffered financial injury as a result thereof. The financial harm caused by the fraudulent programs exceeds $4 billion.
According to the plaintiffs, BNY Mellon played a central role in enabling the laundering of more than $300 million worth of OneCoin’s criminal proceeds by:
- blindly processing transactions with clear hallmarks of money laundering without conducting cursory due diligence to determine the identities of the persons on behalf of whom such transfers were made;
- permitting the Scott Group (one of the co-conspirators of OneCoin) to process more than $300 million worth of OneCoin’s criminal proceeds through its organization over the course of more than 220 transactions and six months before bothering to conduct a minimal internal review into the nature of, and parties involved in, such transactions;
- after BNY Mellon’s compliance team’s December 2016 “internet research” into the Scott Group’s numerous transactions indicated the entity was involved with OneCoin and that OneCoin “appears to be operating a pyramid/Ponzi scheme”, declining to impose any restrictions on transactions involving funds originating from OneCoin or its related entities.
The plaintiffs allege BNY Mellon either had actual knowledge of the fraudulent laundering of OneCoin’s criminal proceeds through its organization or, at minimum, was complicit in the scheme by turning a blind eye to clear red flags, declining to conduct the bare minimum of due diligence required, and/or refusing to adopt safeguards sufficient to prevent the alleged fraud.
The plaintiffs request that the Court declares BNY Mellon liable to the plaintiffs and the class for aiding and abetting of the OneCoin defendants’ fraud on the class.
In its response submitted at the Court on Monday, December 21, 2020, BNY Mellon insists the allegations against it should be dismissed.
According to the bank, the plaintiffs’ complaint barely mentions BNY Mellon and offers purposely vague references to BNY Mellon’s purported misconduct.
Consistent with raft of prior cases, the bank refers to, the claims against it should be dismissed, BNY Mellon says.
First, according to the bank, neither claim is pleaded with the particularity required by Federal Rule of Civil Procedure 9(b), i.e. the “who, what, when, where and how” of BNY Mellon’s purported misconduct.
Second, according to BNY Mellon, the plaintiffs fail to plead particular facts raising a strong inference that BNY Mellon had “actual knowledge” of the underlying fraud – an element of both claims – at the time it allegedly facilitated the OneCoin transfers. Plaintiffs themselves concede that other defendants deliberately “disguised” OneCoin-related transfers to circumvent BNY Mellon’s AML protocols.
And allegations that BNY Mellon gained “actual knowledge” of the OneCoin fraud through its investigation of suspicious transfers fails because suspicions and investigations of fraud – even those that result in remedial measures – are not “actual knowledge” of fraud.
Third, the claims must also be dismissed because the provision of banking services to alleged fraudsters – even if the services make it easier to effectuate the scheme – does not qualify as “substantial assistance” of the scheme or “complicity” by bank principals, BNY Mellon adds.
Finally, the bank says that the plaintiffs’ claims against BNY Mellon contravene decades of case law from courts in New York, as well as the very trial testimony that plaintiffs relied on in drafting the second amended complaint. The claims asserted against BNY Mellon should be dismissed with prejudice, the bank concludes.