Chile’s Free Competition Defense Court (TDLC) has ruled in favor of Latin American cryptocurrency exchange Buda, ordering Banco Itaú and BancoEstado to keep Buda’s checking accounts open after the banks closed them in 2018 amid an investigation into an unrelated Ponzi scheme named Terra Finance. The decision, issued in late 2020, is a landmark victory for crypto exchanges seeking equal access to banking services.
Background: Banks Shut Accounts Over Fraud Concerns
According to Diario Financiero, the case began when four victims of the Terra Finance scam — defrauded of approximately 100 million Chilean pesos (roughly $200,000) — filed a lawsuit claiming they had used Buda’s platform. In response, Banco Itaú justified closing Buda's accounts by arguing that the exchange “is indirectly allowing the use of Itaú’s systems by other cryptocurrency exchanges, of recognized risk, without being able to do anything about it.” The bank also alleged that Buda failed to prevent fraudulent entities like Terra Finance from using its infrastructure.
Court Ruling: Banks' Evidence Insufficient
The TDLC, however, found the banks’ arguments unconvincing. In its resolution, the court stated: “The new information presented does not undermine the serious presumption of the right that is claimed or of the facts denounced in the lawsuit.” The judges emphasized that the banks did not provide sufficient proof linking Buda directly to the Terra Finance scam. Notably, four out of five judges voted in favor of Buda, an improvement from the three votes the exchange received in a prior hearing, signaling growing judicial support.
Buda Legal Team: Battle Continues but Momentum Shifts
Samuel Cañas, Buda’s chief legal officer, told local media: “The bank has not been able to present sufficient information to dismiss the serious presumption of acts that threaten free competition that the Court determined to grant the precautionary measure in favor of Buda.com.” He noted that the ruling reinforces the idea that banks cannot arbitrarily exclude crypto companies without solid evidence. Buda CEO Guillermo Torrealba acknowledged that the legal fight is not over — lawyers estimate at least another year of proceedings — but he expressed confidence that “we are on the right path.” He added that the increased judicial support (four judges vs. three previously) reflects a growing recognition of the anti-competitive nature of de-banking practices against cryptocurrency firms.
Broader Implications for Crypto Banking
This case has become a touchstone for crypto exchanges globally struggling with bank account closures. In Chile and across Latin America, regulators and courts are increasingly scrutinizing banks’ policies toward crypto businesses. The TDLC’s decision could set a precedent for other jurisdictions, demonstrating that without concrete evidence of illegal activity, banks cannot deny financial services to licensed crypto exchanges. As Torrealba emphasized, the ruling is not just about Buda — it is about ensuring fair competition in a digital economy where access to traditional banking is essential for any financial business.