Estonian Bitcoin Trial Reviewed by the State Court

News and Analysis

The cryptocurrency trial in Estonia, or so-called “bitcoin case” was reviewed in open court hearing. A Netherlands enrepreneur, Otto de Voogd, faces trial for running a cryptocurrency exchange. Possible punishment for his activities may place him in jail or cause him to pay enormous penalty fee.

Open hearing is an uncommon practice for a superior court, which, according to some observers, may bespeak the importance of the case.

The trial started almost two years ago, when AML Bureau requested the owner of currently defunct exchange, Otto de Voogd, customer data along with documents licensing him to trade currency. The exchange was used for selling of buying bitcoins. Failure to provide such documents, which was in fact fairly impossible due to cryptocurrency nature of the exchange, resulted in legal proceedings. De Voogd may have to pay 32,000 Euros along with inprisonment. For that reason, he lodged a claim with the court about Estonian Police and Border Guards.

“The AML Bureau believes my client is a financing entity as he bought and sold cryptocurrency named bitcoin. We believe, however, that bitcoin exchange cannot be considered trading with alternate payment means as per AML regulations, so we cannot be compared to a bank or a financing entity,” said Priit Liatt, representative for de Voogd.

The defendant did not attend the hearing. Following the shutdown of the exchange, he left Estonia for good.
The prosecution encompassed representatives from the Department of Police and Border Guards, Ministry of Finance, Ministry of the Interior, the Bank of Estonia, and the Financial Inspection. The court obliged them to formulate their position in bitcoin’s regard, as the AML laws do not mention it.

“This raises the question again, whether bitcoin is different from other electronic currencies. To our reckoning, it isn’t, and it requires no additional regulation. However, the prevailing legislation has to be updated,” said Arnold Tenusaar, advisor for the AML bureau at the Department of Police and Borger Guards.

De Voogd’s representative agrees the law requires updating. The defender also states that the legislation in its current form contradicts the EU laws. For that reason, he believes, the Estonian State Court may seek for clarification in the European Court of Justice.

The State Court is expected to announce its ruling on the ‘bitcoin case’ on April 6, 2016.

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