A legal dispute between Wells Fargo and one of the world’s largest bitcoin exchanges is underlining persistent doubts about the willingness of U.S. banks to participate in the digital currency world.

In a lawsuit filed earlier this month, the Hong Kong-based exchange Bitfinex and another company alleged that Wells effectively blocked U.S. customers from selling their virtual currency holdings. With clients unable to redeem funds, the suit said, Wells’ decision has “substantially interfered with plaintiffs’ ability to operate their businesses.”

It was unclear why Wells blocked the transfers. Bitfinex was the target of a hack last year resulting in over $70 million of bitcoin losses. But, interestingly, Wells was still processing transfers going into the exchange; it only blocked those going back to customers in the U.S.

Yet the action is consistent with a general trend by mainstream financial institutions to move away from correspondent banking relationships amid heightened money laundering concerns, and it demonstrates the difficulties bitcoin companies still face in integrating within the global banking system.

Bitfinex was “put in such dire straits by the bank's shutting it out that it [had] to file a lawsuit,” said Jerry Brito, the executive director of the cryptocurrency advocacy group Coin Center. “If Bitfinex can't get dollars through and from U.S. customers, it's out of business.”

Bitfinex was joined in the lawsuit by Tether, another Hong Kong-based company, which allows customers to make purchases with a digital currency token — or a “tether” — equal to $1 in value. Their complaint, filed in the U.S. District Court for the Northern District of California, said Wells blocked wire transfers originating from four Taiwan-based correspondent banks that service Bitfinex and Tether. The firms claim that the freeze, which began in March, was highly targeted, affecting only outgoing wire transfers from their bank accounts.

“Crucially,” the firms stated, “Wells Fargo has continued to process incoming wires to plaintiffs’ accounts through the Taiwan-Based Banks without interruption or delay.”

The complaint said the Taiwan banks had been able to process transfers related to Bitfinex and Tether for two years.

“As part of its … [know-your-customer] due diligence process with the Taiwan-Based Banks, Wells Fargo knew, or should have known, that the Taiwan-Based Banks were conducting these wire transfers from accounts held by plaintiffs and knew, or should have known, that the nature of plaintiffs’ business involved wire transfers to receive or remit U.S. dollars for the purpose of providing customers with the means to purchase Virtual Currency or tethers,” the suit said.

Wells Fargo declined to comment and has not yet filed a response to Bitfinex and Tether’s claims. But industry observers said the bank may have been worried about illicit financing.

“Maybe the bank is concerned about the sale side,” said D.E. Wilson, a partner at Venable, referring to what U.S.-based Bitfinex and Tether users might be doing with the dollars they receive once they cash out from their virtual currency holdings.

Although many of the largest banks have invested in ventures related to blockchain — the technology undergirding bitcoin — the industry has largely been distrustful of virtual currency firms, which are seen as a major money laundering risk. Regulators have made it clear that they view even the largest exchanges as potential tax-evasion conduits. Hacks like those suffered by Bitfinex last year — the largest breach of a bitcoin exchange since the theft in 2014 of more than $450 million from Mt. Gox — have not helped their image.

As a result, many bitcoin companies say they have had a hard time finding a bank.

“There’s been a bias against companies that have been involved in bitcoin or other kinds of cryptocurrency-related activity almost from the beginning,” said Carol Van Cleef, a partner at BakerHostetler.

In the lawsuit, the two companies said they had informed Wells Fargo that the interruption of the cross-border transfers “presented an existential threat to their businesses.” They asked the court for an injunction to allow wire transfers from the plaintiffs’ correspondent accounts to proceed.

There is precedent for Bitfinex and Tether’s claims. Last year, an Illinois district court judge sided with former users of Mt. Gox in their case against the Japanese bank Mizuho. According to the lawsuit, the bank had blocked some of those users’ withdrawals from their Mt. Gox accounts after finding out that the Department of Homeland Security was investigating the company.

It is unclear whether Wells’ decision came from regulatory pressure, or from an internal risk calculus.

In guidance issued in October, the Office of the Comptroller of the Currency publicly urged banks to avoid the practice of de-risking, or cutting ties with entire regions or industries in order to shield themselves from potential anti-money-laundering violations.

Yet some observers say Wells’ blocking wire transfers to Bitfinex and Tether customers in the U.S. appears less like de-risking and more like an extreme form of know-your-customer vetting.

“De-risking would mean that the Taiwanese bank[s] would have its correspondent relationship[s] with Wells terminated, but that isn't the case,” Wilson said.

In the complaint, Bitfinex and Tether detailed their AML practices, which they said included transactions monitoring, risk assessment and the filing of suspicious activity reports.

“Customers agree to undergo an extensive due diligence process to use Bitfinex’s and Tether’s platforms,” they said. “For instance, plaintiffs have comprehensive 'know your customer' ... standards that require two forms of valid government photo identification, a bank statement, and proof of address.”

For Wells, the bank’s immediate KYC concern would be the Taiwan-based banks with which it has a correspondent relationship, but the decision with regard to the digital currency firms demonstrates the bank went further than just looking at its own customer — but also at the end user.

But Van Cleef said just the fact that the plaintiffs were involved in digital currency transactions should not lead a bank to restrict the relationship.

“If you're going to look through to the customer to see who the customer's customers are, you can't stop there and cut off the customer just because it’s a bitcoin-related company,” she said. “The bank should use the same care and understand what prudential steps the crypto currency company has taken with respect to AML compliance.”