Court: a Virtual Currency Mining Farm to have a Bank Account

On March 17, 2019, the Tel Aviv District Court, according to the Honorable Judge Limor Bibi, ruled that a virtual currency mining farm could manage a bank account.

The lawsuit was against a decision by a union bank to close the account of an Israminerers company, which operates a virtual currency mining farm.

In inaccurate simplicity, a mining farm is actually a collection of computers that performs a large amount of computer work, and which is designed to find a solution to a riddle in which, the bitcoin network will win the computer operator's account a certain amount of bitcoin currency. A similar method works for other currencies such as Litecoin, Etherium, Zcashand more.

The mining farm connected to a shared online database of nicehash, and then of slushpool in order to unite computing forces with other miners in the world, in order to optimize the chance of solving puzzles and winning virtual coins, as a business.

The company that operates the mining farm informed Union Bank on the day of opening the account that the company's business is mining virtual currencies.

The company won Bitcoin coins and listed them in shekels through the Israeli bit2c currency exchange. However, in order to receive the shekels in its Israeli account, in order to pay the company's expenses (salaries, electricity, maintenance, and taxes legally), the bank refused to accept the shekels, and closed the account for the company.

The company appealed to the court, the bank claimed that its policy is not to open or manage an account nor to provide banking services to anyone whose business is virtual currencies, on a sweeping basis.

The Honorable Justice Limor Bibi firmly ruled as follows:

"I will open and say with a 'full mouth' - I think that the bank's sweeping policy, which completely prohibits the opening of an account for a customer who deals in digital currencies, is unreasonable."

The Honorable Judge, having studied the subject in depth and understood exactly the nature of the new field of virtual currencies, added:

"Without derogating from my principles, in terms of the uniform policy as adopted by the Bank, in particular and with regard to activity in digital currencies, I believe that the sweeping policy, which does not distinguish between different types of activities, different types of activity and different types of customers - digital currencies Thus, in this context, I have devoted a broad sheet, at the beginning of the judgment, to clarify the manner of activity in digital currencies and in particular in Bitcoin, since I believe that detailed information is required for it to serve as a platform for presenting the various options for digital currency activities. They are different from each other in the risk involved and, accordingly, each one requires a different approach from the bank. "

In doing so, the judge issued an order to reopen the business account of the company that operates the virtual currency mining farm.

However, the court has placed trading on the stock exchange, and in particular receiving money from the stock exchange, as a high-risk activity. This is because it has to be proven who is the buyer of the coins and the giver of the money. Due to this, the application of the mining farm to oblige the bank to accept the money transfers from the stock exchange was rejected. It should be noted, however, that virtual currency exchanges today take strict measures to verify the identity and full details of users, including an up-to-date photo, passport, proof of address, photocopy of driver's license, information questionnaires and more. The mining farm, in its lawsuit, did not bring a representative of the Israeli stock exchange bit2c to court to testify about the process of identifying users of the site, and about the identity of the same coin buyer who paid shekels for the virtual coins of the mining farm.