A Digital Currency Exchange in Chile Sues Six Banks

A local cryptocurrency exchange in Chile named Orionx has recently filed a lawsuit with the country’s Court for the Defense of Free Competition (TDLC) against six major banks including Bancoestado, Banco de Chile, Banco Bice, Itaú Corpbanca, Santander, and Scotiabank.

Chile’s local publication Diario Financiero quoted Orionx’s lawyer stating: The demand before the TDLC is based on the fact that the defendant banks, abusing a dominant position and with sufficient market power, excluded Orionx from the market of digital payments that was achieved through the refusal of sale and exclusive practices.

The lawyer argued that the above mentioned six banks have nearly 77% control over Transbank which is regarded as the main operator of the digital payments system in Chile. The lawsuit also mentions all those financial entities which declined to sign a contract with the exchange or caused interference and blockage in the exchange’s new bank accounts. The exchange has accused the banks and calls their actions as an attempt to block the competition.

Earlier this year in March 2018, several banks closed the accounts of Orionx along with two other exchanges Buda.com and Cryptomkt. While reasoning the closure of Orionx’s bank account, Bancoestado said it did “not wanting to get involved with transaction operators of cryptocurrencies, because there is no legal framework that regulates them.”

Orionx then filed a request with the TDLC “alleging that Bancoestado failed to comply with the terms established in the contract for this type of procedure,” however, it couldn’t stop the bank from closing its account.

Orionx CEO and co-founder Roberto Zibert said: “What we experienced these months was terrible, from one day to another, they cut us [off from] the income of the company, and we had only been operating for four months, we were very close to bankruptcy.”

In the recent lawsuit, banks have argued that they were forced to close the account of the crypto exchanges because “it is a smoke screen, an appearance of legality, all to mask or disguise the true objective of their conduct,” which “prevent, restrict or hinder free competition.”

Joel Vainstein, the exchange’s co-founder, said:We believe that we have a solid case and that it differs from the rest just because we had an electronic means of payment with customers, called Orionx Pay, which [is] further evidence [of] direct competition in the relevant market.

Earlier this year in March, Buda.com sued 10 banks after they closed its accounts. After proper introspection, TDLC then asked three banks Bancoestado, Itau, and Scotiabank to reopen the accounts of the exchange along with Cryptomkt exchange.

The banks later made a counter-appeal which was rejected by the TDLC. Bancoestado later agreed to reopen the accounts of the two exchanges.