Brazilian Court Orders Bank to Reopen Crypto Exchange’s Checking Account

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A court appeal previously filed by Banco Sicoob seeking to uphold the suspension of the checking account of Brazilian crypto exchange Mercado Bitcoin has been overruled by a Court of Justice in Rio de Janeiro.

In a case between Mercado Bitcoin and Banco Sicoob disputing the bank’s closure of the crypto exchange’s checking account, judge Regina Lucia Passos from 21st Civil Chamber of the Court of Justice of Rio de Janeiro has ruled in favor of the crypto exchange, stating that the bank has not provided any justifiable reason for its decision to freeze Mercado Bitcoin’s bank account, further legitimizing a previous ruling by the district court in Barra da Tijuca granting the exchange the consent to keep its account open.

Citing communiqué 31.379/17 which outlines the “risks arising from the custody and trading of so-called virtual currencies,” Passos argued that despite such warnings, not even Brazil’s central bank has outlawed crypto trading.

As Passos further stressed, Sicoob has not sustained any losses from keeping the crypto exchange’s account active, adding that by unilaterally closing it with only commercial indifference as its only grounds, the bank’s decision has infringed Banco Central do Brasil’s resolution No. 2,025/93, underscoring that there should be a clear and solid basis for enforcing such a measure. In addition, Passos also invoked the central bank’s circular No. 3,788/16, which states that those whose checking accounts are scheduled for contract termination has a right to receive a notification containing specific references that explain the motive behind the decision.

While the Court of Justice’s order may not necessarily be considered a final decision, the ruling is generally viewed as a victory for Mercado Bitcoin.

In October 2018, the crypto exchange has lost a case against Banco Itau, another financial institution that has also previously closed the crypto exchange’s account. Explaining the verdict, the Brazilian High Court stated at the time that banks are well within their rights to terminate accounts associated with digital assets without any basis. According to the court, in order to overturn the ruling, Mercado Bitcoin would have to provide verifiable proof that the bank has violated constitutional rules and subsequently escalate the legal proceedings to the Supreme Court.

That same month, Banco do Brasil and Banco Santander has also been ordered by the country’s Federal District Court to reopen previously frozen accounts of crypto trading platform Bitcoin Max, warning the financial institutions that both will be fined should they contravene the court’s ruling. Furthermore, the court has also characterized the banks’ unilateral measures as both abusive and a breach of prevailing regulations on consumer protection.