Norwegian Court Rules Against Bitcoin Exchange Bitmynt AS
A Norwegian bitcoin exchange Bitmynt AS has lost a lawsuit that was filed in 2017 against Nordea Bank AB. The lawsuit was filed by Bitmynt AS founder Sturle Sunde shortly after the bank suspended its account citing nefarious use in April 2018.
Judge Elisabeth Jordan Ramstad of Oslo District Court ruled that the decision taken by the financial institution Nordea was justified as Bitmynt account holders were suspected of using the service to pay for drugs. The judge also acknowledged the threat of financial irregularities and money laundering due to bitcoin and other cryptocurrencies.
Ramstad continued that the bank cannot be held liable for denying banking services to a customer, under Section 21 of the Financial Agreement Act. Transactions on the bitcoin blockchain are recorded on the public ledger where the original account details of the transacting parties cannot be quickly revealed. Even though the ledger is public, only the cryptographic public keys involved in a transaction can be seen.
Nordea pointed out that the plaintiff’s business is highly unregulated and subject to financial regulations, the latter of which has not been well-defined in Norway yet.
Illegal drug dealings through Bitmynt AS under scrutiny
Kripos, the Norwegian secret police, uncovered a financial trail revealing the exchange’s involvement in dealing drugs. The probe discovered that drug dealers across Norway actively used Bitmynt AS as a payment settlement platform.
The incident was enough to convince Nordea to terminate all banking services and ultimately, suspend Bitmynt’s account. The bank also issued an advisory in January 2018, asking all of its staff to stop trading or investing in bitcoin or any other cryptocurrency.
Bitmynt AS founder, Sturle Sunde, categorically denied allegations that his cryptocurrency business was illegal. He also attempted to justify his stance by saying that bitcoin transactions are not wholly untraceable and that the identity of an account holder could be known to some extent.
Sunde believes that the judge did not understand the matter thoroughly and admitted the following:
“I think the whole sentence is fun. It seems that the judge has skipped the points in the Money Laundering Act, which states that the bank will conduct transactions, including those suspicious, as long as they know the identity of the customer and the purpose of the transaction.”
So far, Sunde has announced that he will appeal against the verdict in the higher courts. He believes that Nordea denying him banking services is a violation of the Financial Agreement Act, the Competition Act, and the Money Laundering Act.
Preferred Payment Option of Darkweb and Drug Dealers
Even though bitcoin transactions are not entirely untraceable, that has never deterred criminals from using it as a payment method, especially in the early days. However, monero (XMR), an alternative digital currency with much better privacy features than bitcoin, has since eclipsed all other cryptocurrencies for that purpose.
Whenever a person attempts to send some monero to another user, the tokens sent would be “mixed” with some other decoy coins by the network, making the transaction effectively untraceable.