Zimbabwe cryptocurrency exchange platform Golix has taken the country’s central bank, the Reserve Bank of Zimbabwe, to court, saying the bank’s ban of cryptocurrency trading was unconstitutional as there are no laws that empower it to make such legislative moves.
After banning banks from processing cryptocurrency transactions in the country, the central bank of Zimbabwe subsequently wrote to Golix — which operates a bitcoin ATM in addition to its online virtual currency exchange market — ordering it to shut down its operations.
“All cryptocurrency exchange houses operating in the country, including Bitfinance (Private) Limited (also known as Golix), are required to cease all virtual currency exchange operations,” wrote Norman Mataruke, the central bank’s registrar of banking in a letter to Golix dated May 15.
Mataruke also directed that cryptocurrency exchange platforms in Zimbabwe were “required to take all the necessary steps to close the cryptocurrency accounts or ‘wallets’ of your customers and to make good any funds currently held on behalf of customers” trading and investing virtual currencies.
This has now sparked a legal battle in which Golix is seeking that the High Court in Harare set aside the directive by the central bank.
“The ban in effect outlaws and classifies as illegal Applicant’s operations,” said Golix in its application to the High Court in Harare. “The Respondents are in fact purporting to classify the trade in cryptocurrency as illegal,” it added.
Respondents are cited as the Reserve Bank of Zimbabwe and central bank governor, John Mangudya. Golix further argues in its court application that the decision taken by the central bank to ban it from cryptocurrency trading in the country amounts to “law making, a function that belongs to the legislature” and not the central bank.
Zimbabwe is facing acute cash shortages, exacerbated by a foreign currency crunch. Bitcoin, ethereum and other cryptocurrencies have become an alternative to the cash squeeze obtaining in the country, driving up prices of the crypto assets against world averages over the past few months.
A spokesperson for Golix had not responded to a request for comment on the developments by the time of writing.
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Last modified: March 4, 2021 5:07 PM