Chile: Court orders banks to open accounts for digital currency exchange

Getting your Trinity Audio player ready...

A court in Chile has ordered two of the country’s largest commercial banks to offer account services to a local cryptocurrency exchange, in a decision that could set a precedent for the wider digital currency industry in the country.

The Free Competition Defense Court ordered Banco Itaú and BancoEstado to open account services for local digital currency exchange Buda.com.

In its judgement, the court agreed that there was insufficient evidence presented by the banks that Buda had been linked to a Ponzi scheme, and said denial of service represented a threat to free competition.

Chief Legal Officer at Buda, Samuel Cañas, welcomed the court’s decision to support Buda in securing basic banking services, Diario Financiero reported.

“The bank has not been able to present sufficient information to dismiss the serious presumption of acts that threaten free competition that the Court determined to grant the precautionary measure in favor of Buda.com.”

Bank accounts operated by Buda were closed by the respective banks in 2018, following an investigation into a rogue finance company, Terra Finance. The alarm was raised after four investors reported losses of 100 million Chilean pesos ($200,000), alleging Buda did nothing to prevent the frauds.

“Buda is indirectly allowing the use of Itaú’s systems by other cryptocurrency exchanges, of recognized risk, without being able to do anything about it.”

The court found no evidence linking Buda to the Ponzi scheme. However, according to Buda’s CEO, the legal battle still has some way to run.

“The new information presented does not undermine the serious presumption of the right that is claimed or of the facts denounced in the lawsuit.”

The decision could raise hopes of a turn in the Chilean banking sector, which has until now been strongly opposed to offering basic services to digital currency businesses.

See also: CoinGeek Live panel, Digital Currency & Global Compliance: Tools & Tips for Exchanges, Wallets & Other Service Providers