BitMarket24 is demanding almost PLN 2.5 million in compensation from the Polish Financial Supervision Authority. The stock exchange claims that its inclusion on the Polish Financial Supervision Authority’s warning list led to the loss of a bank account, being cut off from the payment system and, consequently, the termination of its operations. Supervision denies these allegations. The matter may have significance that goes far beyond BitMarket24 itself.
The company demands exactly PLN 2,481,660.85. The amount is to correspond to the value of the lost business and the profits that – according to calculations presented by BitMarket24 – the company could have achieved if it had continued its operations.
From a meeting with the Polish Financial Supervision Authority to the loss of a bank account
The crux of the matter is what happened at the beginning of 2019.
On January 11, representatives of BitMarket24 met with employees of the Office of the Polish Financial Supervision Authority. The company was to talk to the supervisory authority about continuing its operations. In the same month, the Polish Financial Supervision Authority notified the prosecutor’s office on suspicion of the exchange providing payment services without the required authorization.
For the exchange, this practically meant the loss of one of the basic parts of the infrastructure needed to serve customers. BitMarket24 began refunding users and eventually went out of business.
Now the company is trying to prove to the court that there was a direct connection between the supervisory activities and the business collapse.
The prosecutor’s office discontinued the case. BitMarket24 is still on the Polish Financial Supervision Authority’s list
The continuation of events is particularly important.
The criminal proceedings conducted after the notification of the Polish Financial Supervision Authority were discontinued by the prosecutor’s office on May 30, 2022. On January 11, 2023, the District Court in Zamość upheld this decision.
This information is confirmed by the Polish Financial Supervision Authority itself. Despite the end of the proceedings, BitMarket24 and its related British company BM24 Ltd are still on the KNF’s public warning list.
This is also important from the point of view of how the list itself works. It is not a register of companies convicted of committing a crime. The Polish Financial Supervision Authority publishes there, among others: information about entities in connection with which the Commission submitted a notification on suspicion of committing certain crimes.
From BitMarket24’s perspective, the problem is that the mere suspicion was enough to trigger a sequence of events that – according to the company – led to the closure of the business, although the proceedings ultimately ended in discontinuation.
The exchange talks about a broader policy towards cryptocurrencies
The process may also be interesting for another reason. BitMarket24 intends to convince the court that its case was not isolated.
The company claims that at the time there may have been an informal policy aimed at limiting cryptocurrency companies’ access to the traditional financial sector. One of the elements of the process will be the testimony of people associated with the Polish Financial Supervision Authority, banks and payment operators.
Ten witnesses were called to the first hearing. Among them was the former chairman of the Polish Financial Supervision Authority, Marek Chrzanowski. The plaintiff also wants to hear the current chairman, Jacek Jastrzębski. The PFSA requests that both pieces of evidence be omitted.
These are for now BitMarket24’s claims, not the facts established by the court. The Polish Financial Supervision Authority denies that it pursues a policy aimed at pushing the cryptocurrency industry out of the banking system.
Polish Financial Supervision Authority: there are no grounds for compensation
The supervisory position is completely different.
The PFSA wants the lawsuit to be dismissed and argues, among other things, that the claim is time-barred. He also questions the amount of damage and the connection between entry on the list and the termination of the exchange’s operations.
According to the supervisory authority, the decision to terminate the account was made by Credit Agricole itself based on its own regulations, and the Polish Financial Supervision Authority did not order the bank to end its cooperation with BitMarket24.
The issue of causation may become one of the most important elements of the entire process. The court will have to assess whether the actions of the supervisory authority actually led to the damage claimed by the company and whether they can constitute the basis for liability for damages.
The process is just beginning
The first hearing on September 21 ended without hearing from witnesses. The court decided that they should testify in person. The next dates are set for December 14 and January 18. A decision regarding the possible interrogation of Jacek Jastrzębski will be made later.
Regardless of the outcome of the dispute, the BitMarket24 case may be closely watched by the Polish cryptocurrency industry. For the first time, the court will examine in detail not only the entry on the Polish Financial Supervision Authority’s warning list, but also its economic consequences for a company operating on the crypto market.
If BitMarket24 manages to demonstrate the liability of the regulator and the connection between the entry and the damage suffered, the case may become an important point of reference for other entrepreneurs questioning the effects of the regulator’s actions. If the KNF’s arguments are shared by the court, it will confirm the wide scope of the protective function of the warning list and make similar claims much more difficult in the future.
However, we still have to wait for the resolution of this dispute. The process has only just begun.
