The Third Chamber of the Chilean Supreme Court has rejected the appeal of cryptocurrency exchange Orionx, which means that the account of the company with state-owned BancoEstado will continue to remain closed, local news outlet reports.
Earlier this year, Chilean banks Itau Corpbanca, Bank of Nova Scotia, and state-owned Banco Estado decided to shut down the activities of cryptocurrency companies in the country, when it closed the bank accounts of the largest digital assets platforms Crypto MKT, Buda and Orionx. State-owned Banco Estado has revealed that the closure was due to the bank’s policy not to deal with companies involved in the cryptocurrency sector.
“We hereby inform you that BancoEstado has decided to close the account of which you are the owner, in accordance with the power provided in the Accounts Contract,” a statement from the bank had read.
The Santiago Court of Appeal, which agreed to hear the case back in July, decided that the actions of the bank were “illegal and arbitrary” and that by closing the account of the exchange, the bank was infringing upon a constitutional right to legal equity in the eyes of the state. As a result, the court ruled that the account of Orionx should be reinstated with immediate effect.
However, the Supreme Court has now disagreed with the ruling of the Court of Appeal. The highest federal court in Chile noted that the closure of Orionx’s account by BancoEstado was neither illegal nor arbitrary.
The court also added that cryptocurrencies don’t have physical forms, have intrinsic value and neither are they backed by the government. It went on to argue that the bank had no way of finding out the financial activities being carried out by Orionx, and this imposed a limit on the ability of the bank to ensure certain compliance measures.
“These characteristics and elements determine, therefore, the current impossibility for the Bank to comply with the aforementioned obligations, since it prevents it from knowing in depth the financial activities related to cryptocurrencies developed by the appellant, the most relevant characteristics of its operations, the foundations on which these are supported and, finally, if their amounts are excessive or not,” the ruling reads.
The court went further to add that the lack of clarity in the assets involved led to the difficulty in fulfilling the bank’s duties, which is why it’s supporting its “decision to close the bank account.” It remains unclear what this ruling implies for the other two crypto exchanges that filed appeals with Orionx considering the same thing, although all indications point to the same outcome for them as well.
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Last modified: September 29, 2020 1:21 PM