In a landmark decision, Chile’s Free Competition Defense Court (TDLC) has ruled that two major banks, Banco Itaú and BancoEstado, must keep the checking accounts of Latin American cryptocurrency exchange Buda open. The ruling overturns the banks’ earlier closure of the accounts in 2018, which occurred during an investigation into a Ponzi scheme unrelated to the exchange itself. This decision is seen as a significant win for the crypto industry in Chile’s judicial system.
Background: The Ponzi Scheme and Account Closures
According to Diario Financiero, the legal battle began when four victims of a fraudulent company called Terra Finance — who were defrauded of a total of 100 million Chilean pesos (approximately $200,000) — filed a lawsuit. They claimed to have been users of the Buda platform. In response, both Banco Itaú and BancoEstado closed Buda’s accounts, arguing that the exchange indirectly facilitated the use of their banking systems by other risky cryptocurrency exchanges and did nothing to prevent it. Banci Itaú specifically stated, “Buda is indirectly allowing the use of Itaú’s systems by other cryptocurrency exchanges, of recognized risk, without being able to do anything about it.”
Court Ruling: Insufficient Evidence
The TDLC, however, was not convinced by the banks’ arguments. In its resolution, the court stated that “the new information presented does not undermine the serious presumption of the right that is claimed or of the facts denounced in the lawsuit.” This effectively meant that the banks failed to provide sufficient evidence to justify the closure of Buda’s accounts. The court determined that the banks’ actions could harm free competition and thus ordered them to immediately reopen the accounts.
Buda’s Response: Legal Battle Continues
Samuel Cañas, Buda’s chief legal officer, commented to 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.” However, Guillermo Torrealba, Buda’s CEO, noted that the legal fight is not yet over. He estimated that it may take another year to fully resolve the case, but he expressed optimism, pointing out that this time four out of five judges voted in favor of Buda compared to three in the previous hearing.
Significance and Outlook
This ruling sets a crucial precedent for the cryptocurrency industry in Chile and across Latin America. It demonstrates that banks cannot arbitrarily close accounts of compliant crypto exchanges based solely on involvement in third-party investigations without concrete evidence of wrongdoing. As crypto adoption increases globally, similar conflicts between banks and exchanges are likely to become more frequent. Chile’s decision may influence how other jurisdictions handle the delicate balance between banking regulations and the growing digital asset ecosystem.