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Bitstamp seeks court approval to subpoena Citibank, Bank of America as part of a spat with former payment processor

Bitstamp seeks court approval to subpoena Citibank, Bank of America as part of a spat with former payment processor

Crypto exchange Bitstamp has submitted documents in the U.S. District Court for the Southern District of New York in a bid to subpoena Wall Street behemoths Citibank and Bank of America as part of a discovery process in an ongoing dispute with a payments processor. 

The European crypto exchange claimed in the filing that Danish firm CNG Processing failed to meet the original terms of its business arrangement as a payments process for the firm. Bitstamp hired CNG to facilitate domestic and international banking transfers on behalf of its clients. 

“CNG was significantly delayed in opening the United States bank accounts and, when it did open United States accounts, those accounts were hampered by deposit and withdrawal limits, and other limitations on transfer to, from, and between the relevant Citibank and Bank of America accounts,” the firm said in the court filing. “None of which were contemplated by the parties’ agreements.”

As a result, Bitstamp terminated the relationship between the two firms, demanding a security deposit of more than $1.7 million and customer deposits of around $1 million.

CNG is refusing to hand over those funds, according to Bitstamp’s lawyers. Per the court document, CNG claims it is unable to return the funds because the relevant accounts have been “frozen” by the aforementioned banks.

“CNG has offered no documents from either Bank of America or Citibank to support its claims regarding the status of these accounts,” the filing states, referring to recent testimonies from CNG in a Danish trial, which began in April.

The filing goes on to contend:

“Discovery that sheds light on the accuracy and veracity of CNG’s claims regarding relevant Citibank and Bank of America accounts is crucial to the ongoing controversy between CNG and Bitstamp in Danish Courts.”

The Block reached out to Bitstamp for comment but did not receive one by press time. In a tweet on Tuesday, Bitstamp said that “we’re unable to comment on ongoing legal proceedings, however we can categorically state that we are processing fiat withdrawals,” referring to the contention that the lawsuit had impacted the exchange’s ability to process withdrawals. 

Court documents can be found below:

Bitstamp Application by MichaelPatrickMcSweeney on Scribd

Memorandum by MichaelPatrickMcSweeney on Scribd

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Author: Frank Chaparro