An investment with 100 times the profit! A 69-year-old Israeli citizen invested $3,000 in Bitcoin.

An investment with 100 times the profit! A 69-year-old Israeli citizen invested $3,000 in Bitcoin.
Today, the value of the pensioner’s cryptocurrencies is $320,000. The bank refuses to withdraw the cash.

After making 100 times the return on her initial investment, Bank Hapoalim refuses to pay out the $320,000 profit Esther Freeman earned on her BTC investment, citing that she used her cash to become a BitCoin HODLer. 

8 years ago (in 2013), the Israeli pensioner turned 10,000 ILS (Israeli Shekel), worth about $3,000 USD at the time, into 1 million ILS or about $324,000 USD. However, Hapoalim Bank – one of Israel’s largest banks – refused to release the cash from the cryptocurrency profit, claiming that the cryptocurrency transactions may have been related to illegal financial operations.

Cash is the problem

In 2013, 69-year-old retired Israeli citizen Esther Freeman decided to enter the cryptocurrency market, investing around $3,240 dollars. Despite being 69, the pensioner said she was “young in spirit” and that her investment decision was influenced by her younger relatives:

“I listened to my son and nephews, young boys, and said I would try something new and invest in Bitcoin. I never thought that 10,000 Shekels would become almost 1 million Shekels.”

Although Freeman multiplied her investment 100 times, Bank Hapoalim refused to withdraw the amount transferred from the cryptocurrency platform via the FIAT gateway she was using because the initial deposit (money invested buying Bitcoin) years ago was made in cash.

As such, the source of the funds may have been related to “money laundering or terrorist financing”, the bank explained. In addition, the institution outlined some of the known dark sides of the digital asset industry that banks typically talk about:

“The characteristics of virtual (i.e. digital) currencies allow them to be transferred anonymously and unsupervised, often bypassing the need to use the financial factors that apply to the AML/CFT regime.”

Solicitor will help the pensioner recover cash from Bitcoin investment

To increase her chances of recovering her funds, Freeman appointed attorney Shaul Zioni as her lawyer to initiate a lawsuit against the bank. The pensioner said she had been a loyal customer of the bank for years and needed the money to help one of her children:

“The bank knows my behaviour. I don’t have money anywhere else but at Bank Hapoalim. They know that I do not ‘launder’ money or do illegal business outside the bank. I am retired. All four of my children have bank accounts. I need the money to help one of my children buy an apartment.”

Freeman’s attorney, Shaul Zioni, also spoke on the matter. He noted that his client wants the court to find that the source of the money invested in Bitcoin is “known, clear and supported by references”. Over the years, Freeman kept her Bitcoin in various digital wallets where no further transactions were made, Zioni added.

The court ruled that a financial institution should not restrict account activity to its customers simply because they are linked to digital currencies. 

Israel wants to treat cryptocurrency companies like banks

Due to the risk of digital assets being used in criminal activities, the Israeli authorities recently planned to apply anti-terrorism legislation to banking.

Currently, the government had to spend considerable resources on fraud detection in areas where companies were not required to report all financial operations. If the new policy comes into effect, all cryptocurrency-related companies will have to make reports, like banks.

The new rules should also benefit small businesses dealing with digital assets, as reporting is expected to be accessible and modernised. As a result, these companies can provide greater confidence in the security of their services.

23-11-2021, Mr Advice TEAM

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