Cosgrove Gaynard Solicitors

In
a recent case in the Supreme Court of Israel, the Court held it was unlawful
for Leumi Bank (the “
”) to restrict the banking activity of a
company engaged in cryptocurrency activities.  This precedent should
signal a warning to other banks thinking of stifling the growth in
cryptocurrencies through anticompetitive actions.

The
Supreme Court of Israel overturned an earlier ruling of June 2017 by the
district judiciary court in Tel Aviv that had supported the Bank when
Bits of Gold (the “
”) had sought a court order after being denied
service by Leumi.  The case argued by the Bank centred around a perceived
inability for Bitcoin (“
”) transactions to follow Israel’s
anti-money laundering laws. The Bank also cited the Israeli law against gambling
and instructions from the Bank of Israel as a further justification to block
customer payments to BTC exchanges.

Anat
Baron J, held, the Bank’s decision to terminate the Company’s account was based
on an assumption that violations of the law would take place, however, the lack
of any violations over the past five years supports the decision of undoing
those restrictions.  The Judge added:

“not
intended to harm the bank’s rights to analyse with specificity every
transaction that takes place with the bank account or to take any actions that
are related to minimizing risks, which become transparent through the
activities of the company.”

As more
and more Banks admit that cryptocurrencies pose a business risk to traditional
banking, it not unreasonable for one to feel that Banks may be using current
legislation creatively to ensure they protect their bottom line. Here at
Cosgrove Gaynard we are closing monitoring the situation. Should you require advice in this area, please do not hesitate to contact a member of our technology or litigation teams.

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