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Wells Fargo Won't Cash Out Virtual Currency, Suit Says
Share us on: By Martin O'Sullivan
Law360, New York (April 6, 2017, 3:41 PM EDT) -- Two digital currency companies have hit Wells Fargo with a California federal suit alleging that the banking giant is essentially blocking them from letting customers withdraw their money, which clocks in at a combined $180 million in deposits.
iFinex Inc. and Tether Ltd. on Wednesday said that Wells Fargo recently stopped servicing outgoing wire transfers from a group Taiwanese banks in regard to accounts containing iFinex and Tether customer funds. Wells Fargo made the decision to block outgoing U.S. dollar transfers without consulting the digital currency companies, which currently can’t give customers back their cash upon request, according to the suit.
“Wells Fargo’s decision to suspend U.S. dollar wire transfer operations from plaintiffs’ correspondent accounts and its refusal to speak directly to plaintiffs about their correspondent accounts has substantially interfered with plaintiffs’ ability to operate their businesses,” the companies said.
Tether sells digital tokens that are backed one to-one by U.S. dollars on deposit from customers, which under the company’s terms can be exchanged back for cash at any time. Bitfinex operates a trading platform for virtual currencies, such as bitcoins, that can also be purchased and sold back using U.S. dollars, according to the suit.
Both companies use a group of banks based in Taiwan to interact on their behalf with international banks, including Wells Fargo. The Taiwanese banks use Wells Fargo to process incoming and outgoing U.S. dollar transfers. Tether has about $50 million in customer deposits at the group of banks, while iFinex has about $130 million, the suit said.
According to the suit, Wells Fargo in March told the Taiwanese banks that it would no longer service outgoing U.S. dollar transfers from the iFinex and Tether accounts. The digital currency companies on March 31 received confirmation from one of the Taiwanese banks that outgoing transfers would be blocked.
The companies said that Wells Fargo has not provided any explanation for the move nor has it requested any information from either company. iFinex and Tether said that if customers aren’t able to withdraw money immediately, they may switch to competitors, “some of which have lower due diligence standards than plaintiffs.”
Judge Gorsuch's Road to Confirmation
Follow Law360's up-to-the-minute coverage.
Wells Fargo Won't Cash Out Virtual Currency, Suit Says
Share us on: By Martin O'Sullivan
Law360, New York (April 6, 2017, 3:41 PM EDT) -- Two digital currency companies have hit Wells Fargo with a California federal suit alleging that the banking giant is essentially blocking them from letting customers withdraw their money, which clocks in at a combined $180 million in deposits.
iFinex Inc. and Tether Ltd. on Wednesday said that Wells Fargo recently stopped servicing outgoing wire transfers from a group Taiwanese banks in regard to accounts containing iFinex and Tether customer funds. Wells Fargo made the decision to block outgoing U.S. dollar transfers without consulting the digital currency companies, which currently can’t give customers back their cash upon request, according to the suit.
“Wells Fargo’s decision to suspend U.S. dollar wire transfer operations from plaintiffs’ correspondent accounts and its refusal to speak directly to plaintiffs about their correspondent accounts has substantially interfered with plaintiffs’ ability to operate their businesses,” the companies said.
Tether sells digital tokens that are backed one to-one by U.S. dollars on deposit from customers, which under the company’s terms can be exchanged back for cash at any time. Bitfinex operates a trading platform for virtual currencies, such as bitcoins, that can also be purchased and sold back using U.S. dollars, according to the suit.
Both companies use a group of banks based in Taiwan to interact on their behalf with international banks, including Wells Fargo. The Taiwanese banks use Wells Fargo to process incoming and outgoing U.S. dollar transfers. Tether has about $50 million in customer deposits at the group of banks, while iFinex has about $130 million, the suit said.
According to the suit, Wells Fargo in March told the Taiwanese banks that it would no longer service outgoing U.S. dollar transfers from the iFinex and Tether accounts. The digital currency companies on March 31 received confirmation from one of the Taiwanese banks that outgoing transfers would be blocked.
The companies said that Wells Fargo has not provided any explanation for the move nor has it requested any information from either company. iFinex and Tether said that if customers aren’t able to withdraw money immediately, they may switch to competitors, “some of which have lower due diligence standards than plaintiffs.”
Wells Fargo declined to comment on Thursday.
iFinex is represented by Laurie Edelstein, Michael Baratz and Seth R. Sias of Steptoe & Johnson LLP.
Counsel information for Wells Fargo was not available on Thursday.
The case is iFinex Inc., et al. v. Wells Fargo & Co., et al., case number 3:17-cv-01882, in the U.S. District Court for the Northern District of California.
--Editing by Joe Phalon.
The case is iFinex Inc., et al. v. Wells Fargo & Co., et al., case number 3:17-cv-01882, in the U.S. District Court for the Northern District of California.
--Editing by Joe Phalon.
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