Many might remember the saying when one door closes another one opens, however, it seems the Israeli Cryptocurrency firms have yet to receive this information. Why, you may ask? Well, Israel has for the most part, been decidedly unwelcoming to the idea of non-fiat currency. However, the various firms in Israel determined to carve out a sector of the market for digital-based currencies do not seem to have gotten the memo. These companies have chosen to break the metaphorical door down, rather than go on the hunt for a more welcoming one.
Why The Scandal Broke
One of the largest banks in Israel, the Union Bank of Israel, has been officially sued by Israminers Ltd – a local Cryptocurrency mining start-up for the refusal to provide a legitimate banking service for Cryptocurrency within Israel. The fact of the matter, is that it is a constitutional fact that all businesses within Israel have the right to receive a bank account for their business.
This fact, has obviously slipped the mind of the Union Bank of Israel, as they have chosen to refuse Israminers Ltd a bank account. With no other options at their disposal, Israminers Ltd have chosen to take matters into their own hands and transfer their legal woes to the courts, so that they may finally receive a bank account.
Israminers Ltd have stated that the Union Bank of Israel has for the past three months been their official partner and has been the conduit through which they could conduct financial transactions in an upstanding legal manner. Yet, entirely without warning or reason, the Union Bank suddenly informed Israminers Ltd that they will no longer be doing any business or have any known association with them.
The Union Bank then went on further to state that the bank will not be accepting any monies from crypto exchanges. After this announcement, the bank proceeded to transfer all funds that were stored in the bank account for Israminers Ltd and then abruptly, closed it. This had a devastating impact, as Israminers Ltd has had to cease all business operations, as they have no way of continuing to trade in an above-board and legal manner without an official bank account.
Therefore, the company chose to go to court, at present the Herzliya court has granted a short-term interdict against the Union Bank of Israel, but it remains to be seen how long this will last.
How Israel Stands On Cryptocurrencies
At present, Israel is one of the least favorable countries for Cryptocurrencies, the Israeli financial institutions are largely unfavourable to crypto exchanges. In earlier years, a similar incident occurred between the bitcoin platform Bits of Gold and the Bank of Leumi in 2017.
Ultimately, after reviewing all available evidence, the court found the Bank of Leumi to be in the wrong for refusing to provide Bits of Gold with a bank account and also found them to be in contravention of the constitution of Israel. However, it is unclear at present if Israminers Ltd will be as unfortunate as Bits of Gold was last year.