Six Major Banks in Chile Sued by Another Cryptocurrency Exchange

A local cryptocurrency exchange in Chile has reportedly filed a lawsuit against six major banks in the country for abusing their power and quashing its crypto payment business. This lawsuit follows another one filed in Chile against ten banks by a different crypto exchange.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Six Banks Sued

Chilean cryptocurrency exchange Orionx filed a lawsuit with the country’s Court for the Defense of Free Competition (TDLC) against six major banks in the country last week, according to Diario Financiero. The six banks are Bancoestado, Banco de Chile, Banco Bice, Itaú Corpbanca, Santander, and Scotiabank.

The lawyer representing Orionx, Pablo Tromben of Tromben Abogados legal services, was quoted by the publication:

The demand before the TDLC is based on the fact that the defendant banks, abusing a dominant position and with sufficient market power, excluded Orionx from the market of digital payments that was achieved through the refusal of sale and exclusive practices.

He noted that the six banks control 77.1% of Transbank, the main operator of digital payment systems in the South American country.

The lawsuit includes the financial entities that declined to sign a contract with the exchange or hindered the management of its new bank accounts. The company interprets these actions as an attempt to impede free competition.

Banks Closed Crypto Exchange Accounts

In March, a number of banks in Chile closed the accounts of Orionx as well as two other crypto exchanges: Buda.com and Cryptomkt.

In closing Orionx’s bank account, Bancoestado said it did “not wanting to get involved with transaction operators of cryptocurrencies, because there is no legal framework that regulates them,” Criptonoticias detailed. The company then filed a request with the TDLC, “alleging that Bancoestado failed to comply with the terms established in the contract for this type of procedure,” but it could not prevent the bank from closing its account.

“What we experienced these months was terrible, from one day to another, they cut us [off from] the income of the company, and we had only been operating for four months, we were very close to bankruptcy,” CEO and co-founder Roberto Zibert shared.

According to the text of the lawsuit, banks argued that they closed the accounts of crypto exchanges because “it is a smoke screen, an appearance of legality, all to mask or disguise the true objective of their conduct,” which “prevent, restrict or hinder free competition,” the news outlet conveyed.

Joel Vainstein, the exchange’s co-founder, told the publication:

We believe that we have a solid case and that it differs from the rest just because we had an electronic means of payment with customers, called Orionx Pay, which [is] further evidence [of] direct competition in the relevant market.

Buda.com previously sued 10 banks after they closed its accounts. The TDLC then ordered three of them, Bancoestado, Itau, and Scotiabank, to reopen the accounts of the exchange and of Cryptomkt while the lawsuit is pending. Following an appeal by the banks which was rejected by the TDLC, Bancoestado agreed to reopen accounts of the two exchanges but the other two banks plan to further appeal.

What do you think of Orionx suing the six banks? Let us know in the comments section below.

Images courtesy of Shutterstock, Orionx, and Bancoestado.

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