Itaú's defense argued that KYC and anti-money laundering regulations gave them the necessary powers to close accounts which they, unilaterally and at their sole discretion, decide may be facilitating or participating in illegal activities - even without prior evidence that such activities took place.
Mercado Bitcoin, on the other hand, argued that closing accounts unilaterally constituted abuse of market powers and harmed free market competition in the country.
The STJ high court is divided into sub-courts ("turmas") composed by 5 judges each.
The decision was made by the third sub-court and may now be appealed and referred to the full court for a final decision. Unless the Mercado Bitcoin attorneys can find a Constitutional issue in the case, the STJ court will be the last instance. However, any Constitutional demands would be referred to the Supreme Court.
The lack of Bitcoin regulation in Brazil may have weighed on the judges' decision. According to the head of Bank Rights of the Brazilian Board of Lawyers on the Federal District (OAB-DF) , the banks aren't necessarily "afraid" of the competition posed by Bitcoin.
They're more likely to be intimidated by Brazil's strict anti-money-laundering regulations which could result in liabilities for the financial institutions if they did not apply tough regulations on cryptocurrency transactions.
The Dansk scandal in the UK may also have put pressure on Brazil's financial regulators to apply more pressure on financial institutions.
In Brazil, bank directors can be suspended from the financial markets for up to 10 years if they are found to have failed to act upon suspicious financial activity.
Financial institutions themselves are subject to fines as high as 3X the total financial transactions by non-compliant clients. Banks hold full responsibility for any illegal activity performed using their financial instruments.
This may have been the main reason for Itaú's rejection of Mercado Bitcoin's business and for the closure of MB's accounts in the institution.
At the time of this writing Mercado Bitcoin's Twitter feed did not contain any press releases or comments on the subject.
Mercado Bitcoin has been active for 7 years and has over 1 million clients.
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