We advised a Digital Active, a virtual currency exchange and wallet service provider in Estonia, on the process of submitting a complaint and an application for interim relief to the administrative court against the Financial Intelligence Unit in response of a decision to revoke the client’s virtual currency service activity license.

Incorrect interpretation of the law

We found that the Financial Intelligence Unit incorrectly interpreted the law with regards to the requirement of the license holders’ management board to be located in Estonia and violated important administrative law principles of research and obligation to explain.

The case was finally resolved by the Financial Intelligence Unit providing the client with the chance to maintain their activity license. Therefore, the court process was finalised. We have since supported the client in various further matters including regulatory requirements, employment and corporate matters.

Lack of administrative law principles

The case was important because the legislation based on which the Financial Intelligence Unit made its decision to revoke the client’s license became enforceable in March 2020 and therefore, there was no published court practice on the matter. Furthermore, the legislation in question was intended to target the large number of virtual currency service provider license holders in Estonia as it is believed that many of the license holders do not actually provide their services in Estonia.

This case well illustrated the lack of administrative law principles applied by the Financial Intelligence Unit when applying the law. As a result of our advice, the client was able to continue its business and maintain the jobs of its employees.

Our client team

Our client team consisted of partner Norman Aas, senior associates Sandra Mikli and Albert Linntam for litigation matters and associate Krista Ševerev for regulatory matters.