Bitstamp files to subpoena Citibank, Bank of America in payments lawsuit

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Bitstamp digital currency exchange is seeking to subpoena two U.S. banks as part of its legal battle against one of its payment processors. The exchange filed an application with a New York court seeking to subpoena Citibank and Bank of America to produce documents for use in its court battle in Denmark.

In the application filed at the Southern District of New York, the exchange stated that the subpoenaed documents would be towards its case against CNG Processing. The Danish payments company had been processing payments for Bitstamp until it allegedly failed to meet the terms of their business agreement.

According to the Luxembourg-based Bitstamp, the fallout began after CNG started reporting issues in processing payments for U.S. bank accounts. The Danish firm also started imposing deposit and withdrawal limits to Bitstamp customers, going against the original agreement between the two.

This led to Bitstamp dropping CNG as its payments processor, with the exchange stating on Twitter that it hasn’t used CNG’s services for a year.

The matter relates to a former partner of Bitstamp and we have not used their services in over a year. We're unable to comment on ongoing legal proceedings, however we can categorically state that we are processing fiat withdrawals.

— Bitstamp (@Bitstamp) November 17, 2020

Following termination of the agreement between the two, Bitstamp demanded $1.7 million in security deposit and over $1 million in customer deposits. CNG allegedly refused to comply with the request, blaming U.S. banks, including Citibank and Bank of America.

“CNG has alleged that the money being held in those accounts cannot be removed from those accounts because Bank of America and Citibank have frozen and prohibited withdrawals from those accounts. Accordingly, the status and disposition of the disputed accounts is a vital issue in the Danish Proceeding,” the application stated.

CNG has failed to provide any material support for its claims of American banks freezing it accounts, Bitstamp alleges. This impasse has necessitated the subpoenas, with the exchange expecting “to obtain information regarding the status and disposition of the disputed accounts.”

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