Topic: How to protect yourself from being blocked on a crypto exchange - page 2. (Read 334 times)

There is no such thing as "dirty" or "tainted" bitcoin. It's a term invented by the enemies of Bitcoin and everything it represents. Try to apply that same "dirty" money concept to cash to see how ridiculous it is. Imagine you walk in to my store to buy something. You hand me a $50 bill, and before I accept it, I tell you that I will have to check it for illegal substances. I discover heroin residue at the back of your bill, so I confiscate it and instruct my security guard to arrest you and call the police. We take your wallet and all your cash and hand it over to the police. You will now have to explain to them who you are and prove you are not a drug dealer, as well as answer questions about why you have bills that show traces of heroin on them.

Would you ever come to my shop again? I assume the answer is no. Don't use centralized exchanges that support this nonsense. Use DEXs, P2P trading, and well-known non-custodial wallets, and advice your friends and fellow crypto users to do the same.

I used mostly Kraken and Coinbase, and the US version of Binance before they became restricted.
I never heard anyone getting their account frozen on Kraken. But I read a lot of complaints about Coinbase freezing accounts.

I personally never had a problem with Coinbase in that regard, been using CB since 2018. But they are known to have server issues when it gets very busy and their servers can't handle the traffic and your transaction could get stuck at a crucial time when you need to urgently buy or sell. So I prefer Kraken over Coinbase.

But my first choice are P2P exchanges like HODL HODL or Bisq over any CEX. I only use Coinbase for small transactions.

I used Swan Bitcoin a couple of times about a year ago to buy some bitcoin. The first couple of times went smoothly and I was able to withdraw my bitcoin.
On my third buy with Swan, which was for the same amount as the last two buys, they inexplicably froze my account.
When I asked what the hell was going on they told me my funds would be released after 60 days.

They said they were not accusing me of any wrong doing but they were freezing my bitcoin anyway. What kind of BS is that??
If they are not accusing me of wrongdoing then why the hell are they freezing my funds for?? They never gave me any reason. It was completely arbitrary.

Never had any problem with any exchange freezing my account up until then. Well 60 days came and went and even after 70 days they still did not release my bitcoin.
Bitcoin is supposed to be PERMISSIONLESS and Swan often touts the permissionless nature of bitcoin in their marketing but Swan itself is FAR from permissionless and is just as bad as the fiat banks if not worse. I was surprised and shocked because Swan seemed like a pretty reputable exchange. I will never use Swan again.

I had to scream and curse at them through phone and email and threatened legal action until they finally relented and sent my bitcoin to my hardware address after 75 days.

To protect yourself from something like that, you don't have to use CEX and still keep your Bitcoin in separate wallet which you never share to anyone. But still that is a risk that we may get if we use CEX and get a sends Bitcoin in small amount. If exchanges blocking our accounts, we can explain that we don't related to that and we even don't know who they are.

Maybe CEX will not believe us but we should try to explain as we can. That is why we don't have to store our coins in the centralized exchanges to avoids that such thing.

It's easier to said than done.

Is there a case where a customer file a lawsuit against the exchange and the customer won? or do you have personal experience about it?

I'm not sure where you live, but imagine if you live in a country where was no Binance offices (I mention Binance is the most legitimate exchanges for majority people), how do you file a lawsuit? not to mention the cost you need to pay using your own pocket.

A good choice would be to diversify the funds across different exchanges.
Better yet - across different wallets besides that.

Read the terms. You can also use that for your own protection. If you are flagged on an illegal act that is not written in their terms then you can file a case against them and use the terms for your own advantage.
To avoid this from happening, use legitimate exchanges. And to avoid more don't put all your eggs in one tray. Keep it in a secured storage. Exchange are meant to be used as a trading platform and not a storage which many people does today. It's wrong. So that even if they freeze your account, it won't hurt that much.

In general, you should not keep much of your assets on CEXes and have there only the amounts you would use daily for something - all the rest should go to cold storage / etc. Especially your BTC.

Some Exchange may freeze accounts upon detection of coins that have linkage to illegal activities, even when you received them without your knowing. There have been situations where individuals lost access to their funds because some tainted bitcoins ended up in their wallet. At the same time, however, not all exchanges handle this the same way, and some are more concerned with the big picture in transaction history than with punishing users over random unsolicited transfers. You can protect yourself by using tools that search the history of the Bitcoins you receive and by sticking to exchanges that have very clear, fair policies regarding this issue. And even better, you can protect yourself by not storing large amount of Bitcoin in a centralized exchange for a long period of time.

Or you are in for a ride for a month or two before they will get the info they need to unfreeze you..

The best solution is avoid to use centralized exchanges, use no KYC exchange on kycnot.me, so there's no chance you would end up in this ridiculous drama.

It's why coin control exist.

If the abuser sends small amounts directly to your exchange's address, it's an another problem, but I've never heard such case. Most likely you can make a deal to let the exchange only confiscate the coins that related to high risk funds and you can still withdraw the rest of the funds.

One mistake people do is give people their exchange account address. I don't like that. You can give them a wallet address and after receiving bitcoin in the address, you can send to the exchange address. This maybe not save you completely but it might minimize your risk of exposure.
When it comes to exchange, you can't even know when they'll freeze your account because you have no idea where the bitcoin is coming from.

You can also make sure your follow their rules and don't break any.
Unauthorized withdrawal is also a thing that can cause your accounts to be blocked. Don't try to withdraw money into an unauthorised account.
Also, don't give false KYC.

First, Op, you'd need to understand that tainted bitcoin doesn't mean btc that has gone through theft or dark roads, it's simply the correlation between two addresses. That said, to avoid getting banned by exchanges for receiving suspicious transactions it's preferable to only purchase Bitcoin from regulated exchanges, or use tools like AML quppy bot (I haven't used it before) but applications similar to this are used to trace the origin of coins in a pattern that detects suspicious activities...

Maybe the best advice should be to avoid using centralised exchanges and be free from their troublesome ones once and for all because you can't completely snub bad actors; sometimes those actors might not have any personal problem with you but just want to try out something.
 
They can just go online and search for an address that just conducted a transaction recently and make a random selection. You never can be too sure which address will be picked; as long as you have used your address to send in a transaction, it's public. The only thing is that your identity is not publicly attached to it; only the exchange can see it. 
 
In such a case the person just has to be ready to explain to support how they don't know anything about such a transaction; we never can be too careful when we are using a centralised service.

Just as exchange have what is called, Know your customers (KYC) same thing you should do as an exchange user try as much as possible to avoid sharing our wallet on public domain to avoid bad actor's sending dirty coins into your wallet d avoid receiving money from mixer platform's, Because exchange have it terms against funds comiin from mixer at at some pointheir are flagged as dirt coins.

Gambling also although some exchange including binance are now friendly to gambling deposits if not in some regions funds from casinos can also get your exchange account blocked.

There was a story like this recently. A friend had sent some Bitcoins to another friend's wallet. Both parties had their account blocked by Binance. While the sender was able to have their account unblocked their account after time, the recipient still had to contact their customer support to resolve this issue. To protect account from blocked ensure that the deposits are made from tested and trusted parties. This is also difficult because you don't know if the account where the Bitcoin originated from was already flagged by INTERPOL or other security agencies. Sometimes crypto exchanges may block the account of the a person if they get Bitcoin from an online casino. Take note of this too.

The truth is that over 90 percent of instances of account blocking is from Centralised exchanges mainly and that's because they have rules and regulations that are way too strict and obviously must comply with a couple of government regulations which on the other hand may not favour you.

To avoid being banned or getting a frozen account on Centralised exchanges you have to make sure you properly understand their rules and regulations as well as their terms and conditions. I've seen some discussions about CEX freezing accounts tied to addresses that have relationships with casinos  I'm not too sure about the gist of it but it's very likely to be part of their terms and conditions policies.

I've seen different discussions talking about flagged addresses however the thing is addresses don't actually get flagged that easily in reality because it takes something quite intense to get an address flagged.

Hi everyone, I’ve got another question that’s been bothering me. There are lots of stories about crypto exchanges blocking people’s accounts without any warning or proper investigation. One of the reasons for this is “dirty” bitcoins (AML issues). For example, if an abuser sends small amounts of these tainted bitcoins to random people, and they end up on an exchange, the exchange might freeze your account and take all your funds. On top of that, your wallet could get flagged as suspicious.
Am I understanding this right? How can you protect yourself from something like this?