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Chile Appeals Court Slams Bank for Closing Exchange Account, Mounts Pressure on Banking Institutions

A court of appeal in Chile has recently overturned an action taken by a major bank to close the account of a cryptocurrency exchange, as the pressure is mounting on banks to justify punitive actions against the industry.

The Fourth Chamber of the Court of Appeals of Santiago has ruled in favor of OrionX cryptocurrency exchange, one of several appeals for similar cases against five other banks by cryptocurrency exchanges in the country.

The court ruled against the Banco Estado, one of Chile’s largest banks, stating that the exchange was being prevented:

“…from developing an activity that, although not regulated, does not prevent the bank from adopting less intensive security measures such as the development of effective monitoring and control programs before the final closure of the account.”

The ruling suggested that the banks’ inference that the exchange may be involved in money laundering through some of its digital currencies could not be proven by the bank and that cryptocurrencies “as new forms of investment and payment…cannot necessarily be identified with the commission of criminal acts.”

This is not the first of such suits, as last month six other major banks faced lawsuits for prohibiting crypto exchanges from doing business and there may be more to follow. As of now, the banks appear to be at the receiving end of all the court rulings, which have been in favor of the crypto exchanges.

Another ten banks’ actions were recently contested by crypto exchanges Buda.com and Crytomkt. The court ordered 3 exchanges’ accounts to be reopened whilst the case is still pending.

Local news source Diario Financiero has reported that five more banks are being accused of unfairly closing exchange accounts and have suits pending. The banks involved include Santander, Banco de Chile, Banco de Crédito e Inversiones (Bci), Scotiabank, and Itaú; all responsible for closing crypto exchange accounts are denying them access to banking services for business.

Both Santander and the Banco de Chile have responded to accusations that they had singled out cryptocurrency exchanges: Santander stated that “the use of a current account would not be essential for the digital currency traders,”  which would seem to be little reason for denying a service for the exchange if asked for.

The Banco de Chile said that it had no concerns regarding the “alleged danger of the activity carried out”  but that as it “lacked concrete information”  regarding the exchange’s services, it was justified in its actions of denying service.

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