The Supreme Court of Israel issued a temporary injunction order on Monday forbidding Bank Leumi from sweepingly halting the account activity of the Bits of Gold bitcoin exchange. This is seen as a major victory in the Israeli cryptocurrency industry that will set a precedent for other bitcoin businesses struggling to get banking services.
Also Read: Israeli Bitcoin Company Sues Banks for Not Letting it Open Accounts
Bits of Gold vs. Leumi
Since its inception in 2014, Bits of Gold has, which is licensed as a currency changer business, always held an account with Bank Leumi – one of the top two biggest banks in the country. In 2015, the bank decided to close its account despite the company’s meticulous conduct – only because the company deals in bitcoin, and then Bits of Gold decided to apply to the court for permission to continue using the account.
For several years Bits of Gold worked with an injunction that allowed it to act until a final verdict. A few months ago, the District Court authorized the bank not to allow Bits of Gold to trade in bitcoin, even though it praised its activities.
The company appealed this decision to the Israeli Supreme Court, which immediately issued a temporary injunction, and on Monday passed a temporary order according to which the company can trade digital coins in its account until a ruling is issued on the entire appeal.
The Supreme Court wrote: “It appears that the damages that the bank might incur are mere speculations for now. The decision of the bank is based on the assumption that the company’s activity indeed carries risks that arise in violation of the provisions of the law, and therefore the bank is liable to pay a price for the materialization of those risks. However until now, for more than five years in which the account has been operating, these fears have not materialized – as the District Court has determined that the company acted transparently and did not violate any statutory provision.”
Bank Leumi Not Giving In
“This is a precedent-setting decision whose importance can not be overemphasized in relation to the trading of digital currencies,” said lawyer Shaul Zioni of the legal firm who represented the company. “The court says banks actually can not ban the company’s activities sweepingly and that they should manage their risk.”
Yuval Roash, CEO of Bits of Gold said, “The court’s decision enables us to focus on continuing to establish the crypto community in Israel, and we will continue to lead the field in order to give digital coins the place which they deserve in the Israeli economy – as a tremendous growth engine for hi-tech and the financial industry. ”
Bank Leumi responded: “The bank respects the decion of the court. However, as long as the matter is not regulated by orderly regulatory directives, the bank’s exposure to the client’s activity in bitcoin will be valid – and not only towards the regulators in Israel who are obligated to respect the decisions of the Supreme Court, but also towards foreign regulators who do not consider themselves bound by the decisions of Israeli law. Therefore, as long as no binding legal provisions are determined by the regulator and the relevant parties, the bank will continue to manage the case until the temporary injunction is removed. ”
Should banks be allowed to refuse to open accounts for bitcoin companies? Share your thoughts in the comments section below!
Images courtesy of Shutterstock.
Do you like to research and read about Bitcoin technology? Check out Bitcoin.com’s Wiki page for an in-depth look at Bitcoin’s innovative technology and interesting history.