With the growing popularity of cryptocurrencies, regulators around the world are tightening their oversight of this sphere. The escalating geopolitical situation necessitates more thorough control of transactions through crypto exchanges and other services, often leading to the blocking of crypto wallets.
Governments aim to control the large circulation of digital currency to prevent fraud, including money laundering, and restrict access to those who are not authorized to use crypto assets. This regulation is carried out, among other things, through KYC/AML (Know Your Customer/Anti-Money Laundering) legislative norms, which are mandatory in the USA, the UK, and many other countries.
Crypto exchanges may block user accounts at the slightest suspicion of money laundering or terrorist financing. Users of centralized exchanges and exchangers that comply with sanctions policies may also experience account blockages.
KYC (Know Your Customer) – a procedure applied by crypto exchanges to verify the identity of clients. It includes:
- Verification of identity and citizenship.
- Checking for involvement in illegal activities.
- Analysis of the sources of funds and their destination.
- Identification of suspicious transactions.
This procedure allows filtering out individuals who are not entitled to use crypto assets, including minors and individuals with a criminal record. The collected information is transmitted to law enforcement agencies to investigate criminal activities.
AML (Anti-Money Laundering) – a procedure aimed at preventing money laundering, terrorist financing, and the proliferation of weapons. It includes:
- Tracking transactions over $10,000.
- Transmitting information to regulators and law enforcement agencies.
- Controlling the circulation of crypto assets within and outside the country.
- Obtaining KYC information to prevent participation in illegal activities.
The purpose of these measures is to identify and seize illegal funds and prevent financial crimes.
Our client found himself in a difficult situation: his account on a crypto exchange was blocked, and all his funds were at risk. We immediately got to work. First, we gathered all materials from the client, including screenshots and his explanations, to fully understand the situation. We then examined the exchange's documents, including terms of use, user agreements, and referral program conditions. It turned out that the legal structure of the exchange consisted of nine companies in nine different countries, which significantly complicated the case.
We conducted a detailed analysis of the legislation of three jurisdictions: the client's country, the exchange company's country, and the country specified in the terms of use. We reviewed criminal law, private property protection, and commercial regulation. After this, we prepared a complaint with detailed arguments and advised the client on his chances of success and possible risks, as well as highlighted the weaknesses in the exchange's position. Nine working days after submitting the complaint, the client's account was unblocked, and he was able to safely withdraw all his funds to his own wallets.
Another client also faced account blocking on a crypto exchange. We acted quickly and decisively. We studied the circumstances of the case, gathering screenshots and explanations from the client. We analyzed the exchange's documents, including terms of use and user agreements. We explored the legal structure of the exchange to understand who we were dealing with. We reviewed the legislation of three jurisdictions: the client's country, the exchange company's country, and the country specified in the terms of use. We examined criminal law, private property regulation, and commercial activity.
We prepared a well-argued complaint and advised the client on his position and the weaknesses of the exchange, and supported the client at every stage of correspondence with the exchange. Just two working days after submitting the complaint, the client's account was unblocked, and he was able to withdraw all his funds to his own wallets.
The blocking of cryptocurrency accounts is a common problem that can be resolved with the help of qualified lawyers. If you have not violated the exchange's rules and have not received clear explanations for the blocking, contact a lawyer to initiate a pre-trial review. A lawyer specializing in unlocking cryptocurrency accounts will help you save time, nerves, and money.
Contact us: business@avitar.legal
Violetta Loseva
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Serhii Floreskul
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