Can your bank cut you off if you don’t sell all your Bitcoins immediately?

By July 31, 2023 No Comments

Can your bank cut you off if you don’t sell all your Bitcoins immediately?

Last week the Arnhem Court of Appeal ruled that this should not have been allowed in the case of Decos.

What happened:
Decos is part of a company that focuses on developing new technologies for more efficient working and sustainable living, such as making (government) agencies paperless and digital.
In 2013, it started researching and mining cryptocurrencies. Since that year, Decos has also been buying and selling Bitcoins.

Decos is a customer of Rabobank.
After an interview and an internal customer investigation, Rabobank writes:
– “As the investigation has shown that the company does not comply with Rabobank’s virtual currency policy by buying and selling Bitcoin (BTC) and mining virtual currencies, it should cease these activities immediately.
– As the investigation has shown that the company still has Bitcoins, it should sell them within a foreseeable period of time (i.e. within 3 months) in order to bring its activities in line with Rabobank’s virtual currency policy. We ask Decos to provide proof of sale and a new portfolio statement of the remaining Bitcoins with each transaction”.

Decos raised questions about Rabobank’s virtual currency policy in an email the same day and asked Rabobank to send it to them:
” what I would like to request now is Rabobank’s virtual currency policy. You point out that Decos doesn’t comply with this policy, but we can’t if we’ve never received this policy”.

There was no proper response from Rabobank, and under pressure from the bank, Decos sold the Bitcoin.

But that question turned out to be crucial in the case.

At first instance, Decos lost, but on appeal, Rabobank lost:
The court ruled that Rabobank had failed to send the policy upon request and on top of that had not carried out an individual and careful balancing of interests. Rabobank has argued in general terms that trading in virtual currencies involves an increased risk of money laundering and terrorist financing or other criminal activities. However, Rabobank did not argue that increased risks existed for Decos. In fact, Rabobank based its notification only on categorical concerns regarding virtual currencies. With regard to Decos’ buying and selling of Bitcoin, Rabobank never made clear on what basis the risk was considered to be so high that Decos could be required to sell its entire portfolio within three months.

The judgment is a good example of the balancing act between AML and the banks’ duty of care towards the customer – it is a difficult balancing act, but the customer’s individual situation should be taken into consideration.

Decos will be able to claim damages in a separate action.
Congratulations Michiel Van Eersel, well done!

Be careful though, a letter of termination from your bank is a red flag – take immediate action and seek professional advice from your lawyer.

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