Polish prosecutors have opened an investigation into alleged abuse of power by the country's Financial Supervision Authority (KNF) following a complaint from financial services firm Cinkciarz.pl (Conotoxia Holding), marking a stark escalation in the dispute over the company's revoked payment license.

Polish Prosecutors Launch Investigation into KNF

The District Prosecutor's Office in Jelenia Gora is leading the investigation, which comes amid mounting tensions between the financial regulator and the payment services provider. The probe, according to Cinkciarz.pl, will examine claims of regulatory overreach and potential violations of European Union banking regulations.

“Our position is that the KNF not only broke the current regulations but also misled customers and sent false notifications, resulting in blocking our company accounts,” the company commented in an official statement.

Conotoxia also wants to draw the attention from European authorities, seeking intervention from the European Public Prosecutor's Office (EPPO) and the European Commission. The company alleges serious breaches of EU banking secrecy laws, financial data protection regulations, and principles governing economic freedom within the single market.

The company suggested that the KNF “violates the law” as early as October last year, at the time indicating that it intended to take legal action to prove its case, a stance it reaffirmed a month later. The latest update suggests that the situation has taken a new turn.

$1.7B and Toiler Paper

Meanwhile, there have been no developments regarding the multi-billion-dollar lawsuits against Polish financial institutions for their alleged involvement in a "banking conspiracy" against Cinkciarz. The company previously claimed it would sue nearly a dozen banks for a total of $1.7 billion.

No further updates have emerged on this matter. However, Cinkciarz.pl announced that it would begin producing… toilet paper branded with the letters "KNF"—the exact same acronym that forms the official name of the Polish financial regulator.

Meanwhile, a prosecutor’s case against Conotoxia is underway, reportedly involving 1,200 alleged victims, 328 frozen accounts, and $50 million in Bitcoin that has been seized.

"The number of victims alone demonstrates the scale of this investigation," Anna Marszałek, spokesperson for the Regional Prosecutor's Office in Poznań, responded to Polish local newspaper Rzeczpospolita.

The KNF has not immediately responded to Finance Magnates’ requests for comment on the investigation.