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What to do if a crypto exchange blocked a transaction/account


With the growing popularity of cryptocurrencies, regulators are increasingly turning their attention to bitcoin exchanges, and the latter are more closely monitoring transfers. Against this background, cases of blocking or freezing by platforms of transactions and accounts have become more frequent.

Andriy Martsinyak, attorney at the law firm Juscutum, told ForkLog why cryptocurrency platforms block user funds and what to do if this happens to you.

Why did the exchange freeze/block the account or transaction?

The most common reason for blocking assets is “suspicious” transactions. These may include:

  • transactions with cryptocurrencies acquired illegally. For example, as a result of fraud or illegal activities (the so-called “dirty” crypto assets);
  • transactions related to the transfer to a crypto-wallet of an amount in cryptocurrency that is too large for a particular user.

There were cases when the exchange blocked the client’s access to funds in connection with the entry into force of the decision of the court of foreign jurisdiction on the “freezing” of the cryptocurrency account (freezing order) for the duration of the case, Martsiniak noted.

What to do if the account is blocked?

Firstly, you should start communicating with the support service as soon as possible. The initiative can come from both the exchange and the client himself.

Sometimes, after blocking, the trading platform immediately sends a letter with the corresponding requirement. This can be either a request for an explanation of the purpose of a particular transaction, or an instruction to withdraw your crypto assets in connection with the closure of an account without explaining the reasons.

“At this stage, it is critical to respond as quickly as possible. Even if you have nothing to answer “essentially”, you should write a letter in any case, ”Marcinyak emphasized.

The content of the response may be as follows:

“Your letter is received. Please allow time to collect the information you request and/or engage a lawyer to provide answers to your questions.

A delay on the part of the client will only exacerbate the suspicions of the exchange, which can complicate the unlock procedure.

Secondly, you should try to determine the reason for the freezing of the transaction or blocking the account.

“Why ‘try’? Because in some cases, the exchange does not have the right to disclose the reasons for blocking an account/transaction,” the lawyer said.

This is mainly due to investigations conducted by law enforcement agencies in relation to crypto assets held on the client’s account on the exchange.

It works like this: the platform receives a request from law enforcement officers with a request to freeze a certain transaction/account for a certain period. The reasons for blocking in such cases are not disclosed, since the account holder may be suspected of committing an investigated offense.

If the exchange explains the reasons for the blocking, it will become clear what documents should be provided to lift the restrictions.

Thirdly, you must be prepared to provide proof of funds. They must be proportional to the blocked amounts. In addition, documents should clearly and understandably describe the essence of the user’s activities.

“If you know that you should receive a large amount of funds in cryptocurrency, it is better to prepare documents confirming the legitimacy of the operation in advance,” Marciniak said.

Such documents can be, for example, an agreement on the sale of property, the funds from which you transfer into cryptocurrencies, a bank statement, a certificate of income, and the like.

During communication with the exchange, it is important not to harm yourself, the lawyer emphasized:

“For example, talking about using an account created in the name of your grandmother and verified on her behalf is a bad idea. Almost all exchanges have a rule that crypto assets must belong directly to the person who went through the KYC procedure, that is, the owner of the account on the exchange.”

Preliminary collection of documents, their prompt provision to the site upon request will lead to faster unfreezing of the account and / or transaction.

“Maximum transparency of operations and preparation will be able to secure your crypto assets and save your nerves,” Marciniak summed up.

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My profession is a journalist, but my hobby for 8 years has been studying Forex investing and trading. During this time, I managed to gain extensive experience in investing and trading cryptocurrencies and double my capital in the Forex market. To be the author of this magazine, the site owners invited me to participate in one of the 2020 trading webinars, and I will try to reveal the most relevant crypto market news for you.

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