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Bitcoin Exchange Bitfinex Sues Wells Fargo Over Embargoed Wire Transfers

Last Updated March 4, 2021 4:55 PM
P. H. Madore
Last Updated March 4, 2021 4:55 PM

A lawsuit filed Wednesday in Northern District of California federal court, San Francisco division could turn out to hold meaning for the entire Bitcoin world. Bitfinex, the exchange which took heavy losses in face and treasure when it was hacked in 2015, is taking Wells Fargo to court for having reversed US dollar cash deposits designated for their customer accounts coming from Bitfinex.

The legality of shutting down bank accounts merely for being related to the use of Bitcoin or cryptocurrency trading has long been questionable, but the outcome of this lawsuit could bring some clarity to the situation. The three companies which make up the Bitfinex in a legal sense as well as UK-based Tether Limited and iFinex, another financial firm affected by Wells Fargo’s policies, are the plaintiffs in the suit.

The opening salvo makes it clear enough for the court what’s at issue:

Wells Fargo has suspended U. S. dollar wire transfer operations needed to remit to plaintffs’ customers U. S. dollars that the customers deposited with plaintiffs to purchase digital currency, causing imminent and irreparable harm to plaintiffs.

The suit also capitalizes on Bitfinex’s long-standing commitment to complying with all laws in countries it operates in, including know-your-customer laws meant to curb money-laundering and terrorist financing.

Plaintiffs have worked cooperatively with U. S. law enforcement agencies, such as the Department of Justice, Federal Bureau of Investigation, the Internal Revenue Service, the Department of Homeland Security, the Secret Service; with independent federal regulators such as the Commodity Futures Trading Commission; and with state regulatory agencies and others, to uphold the highest standards of integrity and compliance with regulatory law.

The legal basis for the lawsuit  lies in the fact that Bitfinex and the others work with Taiwanese banks, including a bank called Taishin, who were responsible for relaying the transfers to US customers using Wells Fargo, among others. Until last month, this system worked fine, but then Wells Fargo sent a letter to the Taiwanese bank informing them that they would no longer accepting the deposits from these accounts until “further due diligence” was obtained. The problem with the demand for more information was not followed up with any specifics, and so:

Plaintiffs have received no inquiry or request for information. If any request had been made, plaintiffs would have fully cooperated and responded to same. Plaintiffs have a long history of responding timely to requests for information from the Taiwan-Based Banks and, inderectly, from any correspondent banks.

The next paragraph notes that Wells Fargo has not prevented customers from sending funds to Bitfinex, but only from reaping the proceeds of their investing activity.

Bitfinex is looking for the maximum possible financial judgement, having suffered heavily in customer relations at the hands of Wells Fargo, as well as a court order for Wells Fargo to cease interfering with US Bitfinex withdrawal transactions.

In two short days, the lawsuit has already generated over 25 separate documents. This is a popular tactic of big corporations who are under fire for their decisions, but unluckily for Wells Fargo, Bitfinex and company appear ready to fight.

Featured image from Shutterstock.