Bitcoin

Bitcoin Exchange Sues Wells Fargo

A bitcoin exchange has filed suit against Wells Fargo after the U.S. bank limited its ability to move funds globally.

Hong Kong-based exchange Bitfinex filed suit in the U.S. District Court for the Northern District of California, alleging that Wells suspended outgoing wire transfers to the U.S. from four Taiwan-based banks that service Bitfinex.

Bitfinex was reportedly joined in the lawsuit by another Hong Kong-based company called Tether, said American Banker. Tether, which allows users to make payments with a digital token worth $1, also alleges that it had wire transfers frozen by Wells Fargo. Bitfinex and Tether allege the transfer freeze was targeted to affect only outgoing transfers from their accounts.

According to Bitfinex, this effectively blocks stateside customers from selling virtual currency holdings. The digital currency exchange is seeking an injunction against Wells Fargo to prevent wire transfer stoppage, along with as much as $75,000 in damages.

The lawsuit stated that Wells Fargo had been made aware that the interruption of the cross-border transfers “presented an existential threat to their businesses.”

“The decision to initiate legal action is because we cannot allow precedents in this industry where clearing houses can disrupt businesses that are by all metrics complying with the rules in place,” Bitfinex wrote in a statement on social media.

Wells Fargo has yet to comment on the reason for the transfer freeze, though the move could be due to regulatory pressure. A number of U.S. organizations have issued guidances on digital currency in the past few years, including a warning issued last month by the Federal Reserve.

“Central banks could face difficult trade-offs between strengthening security and enabling illegal activity,” Jerome H. Powell, a governor of the U.S. Federal Reserve, said in a statement last month, noting that significant security and privacy issues still exist in the digital currency space that need to be addressed.

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