Account blocking on crypto exchanges is becoming increasingly common in the modern cryptocurrency world. This phenomenon is driven by heightened regulatory and law enforcement attention to the digital asset market. Many crypto exchanges have significantly strengthened their regulatory compliance measures and intensified their cooperation with law enforcement. These changes have led to an increase in account-blocking cases. Why does this happen? What should you do in such a situation? Here’s a detailed explanation.
Crypto exchanges may block accounts for various reasons. Here are the most common ones:
1. Darknet connection: If digital assets are linked to darknet marketplaces, such as Hydra, using such assets on centralized exchanges can lead to account blocking. Databases of wallets associated with illegal activities are constantly updated.
2. Stolen cryptocurrencies: Interaction with stolen cryptocurrencies increases the risk of blocking. There are various methods for reporting cryptocurrency thefts, making these transactions high-risk.
3. Sanction lists: The presence of virtual assets from sanctioned wallets, such as those from Bitzlato or Garantex, is one of the main reasons for account blocking. Sanction lists, such as the SDN (U.S. Office of Foreign Assets Control), EU lists, UN lists, and UK regulators, are constantly updated.
4. High-risk jurisdictions: Countries that belong to the FATF “grey” or “black” lists can increase the risk of transaction blocking.
5. Unregulated exchanges: Operations with platforms located in offshore jurisdictions and lacking regulation can also be a reason for blocking.
6. Scam connections: Interaction with wallets of fraudulent projects, financial pyramids, and exit scams increases the risk of cryptocurrency blocking.
7. Enforcement action: Interaction with companies or individuals subject to search, judicial, or other actions can also lead to account blocking.
8. Other sllegal activities: Automatic analysis tools quickly identify addresses involved in illegal activities, such as human trafficking, also increasing the risk of blocking.
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, carefully examining all details:
- We collected all materials from the client, including screenshots and his explanations, to better understand the situation.
- We reviewed the exchange's documents, including terms of use, user agreements, and referral program conditions.
- We discovered that the legal structure of the exchange consisted of 9 companies in 9 different countries, significantly complicating 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 considered criminal law, private property protection, and commercial regulation.
- We prepared a complaint with detailed arguments.
- We advised the client on his chances of success and potential risks and revealed weaknesses in the exchange's position.
Result: Nine working days after submitting the complaint, the client's account was unblocked, and he could withdraw all his funds to his wallets safely.
Another client also faced account blocking on a crypto exchange. We quickly and decisively took action:
- We studied the case circumstances, 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 examined the legislation of three jurisdictions: the client's country, the exchange company's country, and the country specified in the terms of use. We considered criminal law, private property rights, and commercial regulation.
- We prepared a well-argued complaint.
- We advised the client on his position and the weaknesses of the exchange.
- We supported the client at every stage of correspondence with the exchange.
Result: 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.
These stories demonstrate how our lawyers can turn complex problems with blocked funds on crypto exchanges into successful solutions using experience, knowledge, and persistence.
To reduce the risks of your account being blocked on a crypto exchange, follow these recommendations:
1. Check sender wallets: before conducting large transactions, check the sender wallets through various online services.
2. Use one-time wallets: receive large amounts in stablecoins to new addresses and check them for “cleanliness.”
3. Avoid unregulated exchanges: use only regulated exchanges and avoid platforms under sanctions.
By following these recommendations, you can minimize the risks of blocking your cryptocurrency assets and ensure their safety.
Contact us: business@avitar.legal
Serhii Floreskul
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Violetta Loseva
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