Polish
payment and currency exchange services provider Cinkciarz.pl (Conotoxia) has
filed a legal challenge against the country’s market watchdog KNF over the
revocation of its operating license. The fintech argues that the regulator’s
decision could harm customer interests rather than protect them.

Cinkciarz.pl Challenges
License Revocation, Citing Customer Risk

The
Warsaw-based fintech company is contesting KNF’s October 2 decision to
withdraw its domestic payment institution license, taking the matter to the
Voivodeship Administrative Court. The dispute centers on the regulator’s
interpretation of how customer funds should be held and protected.

“The
authority’s decision could lead to significant hindrances and delays in service
provision to our customers,” said
a Conotoxia representative in court documents. “This outcome would be
precisely opposite to the intended effect of ensuring market stability and user
safety.”

At the
heart of the dispute reportedly lies KNF’s changed stance on Conotoxia’s
long-standing practice of using bank accounts belonging to its agent,
Cinkciarz.pl, to hold customer funds. The company argues this arrangement had
been accepted by the regulator since 2017 without objection.

“The only
way to minimise this risk and to rectify the mistakes made in the Authority’s
actions is to suspend the enforceability of the decision and to revoke it,” the
statement added.

The payment
provider maintains that KNF’s interpretation of the Payment Services Act
extends beyond both the act’s content and underlying EU regulations.
Particularly contentious is the regulator’s position on segregated bank
accounts and the calculation methodology for protected funds.

The
standoff between Poland’s financial regulator and Conotoxia has been going on for over a month. On one side, the company accuses the KNF of “violating the
law” and “destroying” businesses. On the other, the Polish regulator has issued
a negative recommendation against the fintech as it seeks a European banking
license to continue its operations.

Banking Sector Challenges

The case
highlights broader challenges facing Poland’s fintech sector. Conotoxia reports
that attempts to comply with KNF’s new requirements have been met with
resistance from banks, with all but one refusing to modify account agreements
or provide requested bank guarantees.

Cinkciarz.pl
has initiated actions not only against Poland’s KNF but also against the
banking sector, alleging a 14-year-long blockade of its transfers totaling $300
million.

The money
exchange company plans to sue nearly all major banks operating in Poland,
accusing them of “conspiracy.” The lawsuit already targets 11
entities, with Cinkciarz.pl seeking a total of 6.75 billion zlotys ($1.65 billion)
in damages.

Operational Impact

Despite the
regulatory concerns, Conotoxia emphasizes its operational stability, noting
that only four out of 224 customer complaints in the first half of 2024 related
to transaction delays. The company argues this track record contradicts KNF’s
assessment of its financial situation.

Cinkciarz.pl
is actively seeking ways to navigate its challenging regulatory situation.
Beyond pursuing a European banking license, the company previously announced
its intention to secure a foreign investor. Nearly a month ago, Cinkciarz.pl
revealed it was in “advanced talks” with an investment fund whose
support could help stabilize its operations.

The issue
primarily concerns Conotoxia Sp. z o.o., a subsidiary of Cinkciarz.pl
registered in Poland. It’s worth noting that this entity is distinct from
Conotoxia Ltd., a Cyprus-registered company responsible for the fintech’s
retail FX/CFD trading business.