The Court of Justice in São Paulo, Brazil, has recently ruled Banco Santander has to unfreeze the account of a local cryptocurrency exchange, Mercado Bitcoin, with over 1.35 million reals ($350,000) in it. This, after determining a “lack of regulations doesn’t make [something] a criminal activity”.
According to local news outlet Portal do Bitcoin, judge Renata Barros Souto Maior Baião ruled in favor of the cryptocurrency exchange after determining bank Santander acted in an abusive way, as it apprehended the resources of Mercado Bitcoin “over fraudulent operations conducted by third parties.”
As a result, Santander was forced to unfreeze the exchange’s $350,000, with “interest of 1% per month.” In the case, the judge clarified that a lack of clear regulations on cryptocurrencies and businesses doesn’t mean illicit activities are going on.
Baião added, in fact, that the exchange, acting on good faith, isn’t responsible for the action of its users.
Bank Freezes Crypto Exchange’s Account
Going into detail, the case itself was brought forward by Mercado Bitcoin after Banco Santander froze its account, claiming there were “bank fraud” suspicious involving some the crypto trading platform’s clients.
Summarizing what exactly happened, the news outlet clarifies “several Santander clients carried out transactions that benefited other bank clients, which in turn used the funds to purchase cryptocurrencies” with Mercado Bitcoin.
Vai aproveitar a folia ou tirar os dias de Carnaval para descansar tranquilo? Então não perca tempo e faça seu depósito (TED) agora mesmo! No Carnaval, tanto depósitos quanto saques sofrerão alteração no horário de aprovação devido ao recesso bancário. https://t.co/O15B8y6k7E pic.twitter.com/y7pwAvw1FJ
— Mercado Bitcoin (@MercadoBitcoin) February 27, 2019
Per the case, Santander analyzed various transactions related to the case and found out dates, values and favored, even incurring in Google Street View searches to gauge the financial conditions of those involved.”
It found out who was benefiting from the fraud. Instead of acting against them, it decided to block the crypto exchange’s account. In the sentence, the judge stated:
Faced with such a scenario, the banking house itself might have sought to hold those who made the fraudulent transfers accountable, but instead preferred to block the account of the author and appropriate the amounts therein up to the full value of the transactions.
Baião also made it clear the cryptocurrency exchange’s security systems aren’t good enough to prevent fraud, but noted the bank attempted to “criminalize” cryptocurrency-related transactions, even though Brazil’s central bank hasn’t declared Mercado Bitcoin’s activity illegal.
She added that Mercado Bitcoin doesn’t have to supervise its users to determine whether they’re declaring their cryptocurrency purchases.
Another Win For Cryptocurrency Exchanges
Notably, cryptocurrency exchanges in Brazil have often battled financial institutions who shuttered their accounts. As CCN covered, Brazilian exchange Bitcoin Max won a standoff against Santander and Banco do Brasil, as the financial institutions reopened its accounts to avoid facing fines.
In August of last year, exchanges in the country were sent a 14-point questionnaire as the government was looking to learn more about their business. Later on, in October, the country’s antitrust watchdog CADE, sent them a questionnaire they had to answer or face a fine of up to $25,000.
Despite the scrutiny, the crypto scene in the country has been growing. XP Investimentos, Brazil’s largest investment firm, has launched a crypto exchange called XDEX.