In May last year, Union Bank, the sixth largest bank in the country of Israel, tried to deny a cryptocurrency mining company from operating an account with them. Israminers Ltd., the company in question, retaliated by filing a lawsuit against the financial institution.

Per the case, the bank had stated that it will no longer allow the firm to accept any funds from bitcoin exchanges. The lawsuit also detailed that the bank had sent back money already received in the account, which prevented it from purchasing additional mining equipment, while also shutting down the company’s account within a 30-day period.

The Court Confirms: Bank’s Move is “Unreasonable”

The court has since come down with an argument against the bank’s sweeping policy. The statement came from judge Limor Bibi, as reported by Israeli daily business news outlet Calcalist.

“I believe that the sweeping policy, which does not distinguish between different types of activity, scope of activity and different types of customers — in the field of digital currencies — is unreasonable.” – Judge Bibi said.

Nevertheless, the judge also argued that it is within Union Bank’s rights to refuse deposits which have originated from cryptocurrency trades.

In these circumstances, I find the bank’s argument that, given that the ‘money trail’, as defined, in terms of sales in a trading arena to an unknown factor which knowledge of it haven’t been proven, creates risks of money laundering. As a result, I find the bank’s refusal to provide service with regard to the receipt of the money deposited in the account as reasonable. – Added Judge Bibi.

It’s Not the First Time

Unfortunately, that’s not the first instance where financial institutions have had to be told by the court not to scope out cryptocurrency-related businesses, as well as users without any justifiable reason.

Back in May 2018, the largest bank in Israel, Bank Hapoalim, was forced, again by the same judge, to accept a transfer of funds which have originated from the sale of Bitcoin to a client who had all the necessary documents which tracked the trade from start to finish.

Interestingly enough, however, the country’s stance on cryptocurrencies doesn’t seem to fall in line with its banks’ actions. Last August, officials from the Finance Ministry of Israel spoke of a state-backed virtual currency which was to be rolled out in order to reduce the overall number of cash transactions in the nation. Additionally, its purpose also included cracking down on tax evasion, as well as money laundering.

They highlighted the convenience of an immediate settlement while outlining that the virtual currency would supposedly act similarly to cash.

You can imagine that instead of giving you a piece of paper saying the Bank of Israel on it, I can send you a piece of digital code that was issued by a central bank. – The official said.

What do you think of the Tel Aviv Court’s argument regarding Union Bank’s move to close accounts of a crypto-related business? Don’t hesitate to let us know in the comments below!