Israeli Court Forces Bank Hapoalim to Accept Bitcoin Funds

The court issued temporary injunction order against Israel's largest Bank

by Marin Marinov
09 May • 2.5 min
In Regulation

The District Court of Tel Aviv has ordered Bank Hapoalim, Israel's largest bank, to accept client funds from Bitcoin (BTC) sale, the law firm that represents the plaintiffs said in its blog.

On March 14, Bank Hapoalim denied the incoming transfer of around USD 195 000, made by Shalom and Lior Simon (father and son) from BTC trading on a European exchange. The financial institution claimed that the sale of Bitcoin was linked to money-laundering and terrorism financing. 

The plaintiffs claimed that the transaction was declared to Israeli Tax Authority and was not in violation of any anti-money laundering (AML) or counter-terrorist financing (CTF) law provisions.

On Sunday, the judge imposed a temporary injunction obliging the bank to accept the money until final court ruling. The magistrate refused to issue gag order meaning that all information should be made public.

“This is an important precedent that obliges the banking system as a whole to reconsider its policy regarding funds originating in virtual currency transactions, while conducting a real and relevant examination of each ad hoc transaction, rather than automatically revoking each transaction without examining it on its merits,” the law company wrote in its blog as quoted by Finance Magnates.

Israeli court and cryptocurrency

Earlier this week, another Israeli district court, in Herzliya, issued temporary injunction against Union Bank. Israminers, a coin mining company, brought the sixth largest bank to court accusing it of blocking the company's account holding funds from Bitcoin exchange BIT2C. The crypto firm claimed that the bank took the step unilaterally after three months of operating the account.

one big circle with letter B inside

Israminers accused the financial institution of pressure because the bank gave the company 30 days for closing the account and wanted to return the previous funds from BIT2C thus preventing Israminers from buying new mining hardware.

The Union Bank injunction is in line with a Supreme Court ruling from February when Israeli Bits of Gold exchange sued the country's second largest bank Leumi over its decision to close the company's account. After several lower court rulings, the Supreme Court issued a temporary order that obliges the bank to accept funds from Bitcoin trading in Bits of Gold account until the final verdict.

“The decision of the bank is based on the assumption that the company’s activity indeed carries risks that arise in violation of the provisions of the law, and therefore the bank is liable to pay a price for the materialization of those risks. However, until now, for more than five years in which the account has been operating, these fears have not materialized…,” the Supreme Court wrote in its ruling.