Legal

Supreme Court of Chile validates decision to close Chilean crypto exchange’s bank accounts

Quick Take

  • BancoEstado closed Orionx’s bank accounts using a unilateral termination clause
  • Orionx argued that BancoEstado’s decision was abusive and illegitimate, and filed an appeal to the Supreme Court of Chile
  • The Court rejected their appeal, ignoring a legal principle that allows any activity not expressly forbidden 
  • The ruling is not a positive sign for crypto in Chile

The Block is delighted to bring you expert cryptocurrency legal analysis courtesy of Stephen Palley (@stephendpalley) and Nelson M. Rosario (@nelsonmrosario). They summarize three cryptocurrency-related cases on a weekly basis and have given The Block permission to republish their commentary and analysis in full. Part III of this week’s analysis, Crypto Caselaw Minute, is below.


There are four billion reasons to read this week’s CCM. Palley looks at a Florida case that deals with the alleged misappropriation of $4 Billion USD in bitcoin, Rosario writes up a new lawsuit filed in federal court in NY that concerns a crypto investment scheme gone wrong, and finally we are lucky to have another guest post from attorney Andrés Chomczyk who gives us the 411 on a bad case for crypto from the Chilean Supreme Court. (As always, Rosario summaries are “NMR” and Palley summaries are “SDP”, and for this week our guest summary is labeled “ACH.”)

Disclaimer: These summaries are provided for educational purposes only by Nelson Rosario [twitter: @nelsonmrosario] and Stephen Palley [twitter: @stephendpalley]. They are not legal advice. These are our opinions only, aren’t authorized by any past, present or future client or employer. Also we might change our minds. We contain multitudes. (Picture credit: Pixabay; CC0 Creative Commons)

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Orionx SpA contra del Banco del Estado de Chile (Chilean Supreme Court, 3d Chamber, 12/3/2018). [ACH]

Link to opinion

On the eve of laBITconf, the most important conference in Latin America on Bitcoin and held in Santiago, Chile on December 3, 2018, the Third Chamber of the Supreme Court of Chile rejected an appeal filed by the Chilean exchange Orionx against Banco del Estado de Chile (“BancoEstado”). Orionx initiated the case with the filing of a “recurso de protección”; this is a kind of procedure where the plaintiff seeks a writ from a court against a defendant that is acting in a way that the constitutional rights of the plaintiff are affected in a manner where a quick and immediate solution is needed.

BancoEstado closed Orionx’s bank accounts using a unilateral termination clause that was written in the bank account agreement entered into with Orionx. BancoEstado supported the lawfulness of its actions in that, according to its AML manuals, they could not operate with clients whose activity was the exchange of cryptoassets as long as there was no proper and formal regulatory framework for such activity. Orionx, through the rejection of the appeal, was denied its constitutional right to exercise a legal activity as there is no law or regulation in Chile that prohibits the exchange of cryptoassets. The ruling of the Supreme Court clearly ignores the principle of permission, which allows the practice of any activity which is not expressly forbidden. In particular, the judgment ignores the fact that Orionx’s activities are covered by the rest of the legal system, such as consumer protection and general commercial regulations, which are applicable regardless of the activity in question.

Orionx argued that BancoEstado’s decision was abusive and illegitimate, because the reason given was not foreseen among the reasons that authorized the unilateral termination of the agreement. The Supreme Court considered that the list of reasons provided in the agreement was merely enunciative and that the grounds alleged by BancoEstado were valid for the termination of the agreement and the closure of the account. This decision of the Supreme Court is also a setback since it supports the practice and exercise of abusive clauses in agreements with predisposed clauses, such as a form requesting a banking product.

The ruling handed down by the Supreme Court of Chile represents a potentially deadly blow to the crypto ecosystem in Chile by allowing the actions of financial institutions (we recall that the Chilean crypto ecosystem has been the victim of a coordinated attack by the banking system) and left without immediate constitutional protection to the actors that drive the development of this new industry. This action may subject the industry to both more extensive and expensive judicial procedures that many of these companies cannot support. Fortunately, the arguments of the ecosystem are being received in good form by the Court of Defense of Free Competition, according to some sentences already issued, when it is claimed that these practices constitute attacks on free competition.