Topic: What could make an exchange to seize users assets - page 2. (Read 810 times)

Yes, it's for Binance.us, but I for one don't believe for a second that Binance and Binance.us are entirely separate entities and don't co-mingle funds. The SEC filing even goes as far as ordering CZ to turn over customer coins which are in his personal possession. If CZ is personally holding users' coins, then Binance and Binance.us are almost certainly moving funds back and forth between them.

And the biggest typewriter company in the world thinks computers are too complicated and overpriced and says people shouldn't risk using them.

He wants people to keep their coins on his platform, because he can use them to make himself more money.

This is just factually incorrect. Let's add up all the centralized exchange hacks, scams, and insolvencies, shall we?

If I am not wrong, Isn't it for Binance.us only? I mean, Binance.us is Used by users from the USA only, right? I am unsure what is happening with them because I am not from the USA. I have less than $30 in my Binance exchange wallet, which you can consider a leftover. If users from the USA know what's happening and have access to withdraw their funds, I am not sure what they are waiting for. They should move their coins asap to a non-custodial wallet if they don't have hardware or a Ledger wallet.

The funny thing is, once CZ said , only 1% of people can handle crypto self-custody right now on December 15, 2022. Cointelegraph published an article where they said;

CZ has been a supporter of self-custody for years, referring to it as a “fundamental human right,” but has always urged users to “do it right.” He published a “CZ’s Tips” on self-storing crypto in February 2020.

During a Binance-run Twitter Spaces on Dec. 14, the Binance CEO continued to urge caution for those using self-custody wallets, arguing that more often than not, security keys are not stored securely, backed up or properly encrypted:

“For most people, for 99% of people today, asking them to hold crypto on their own, they will end up losing it.”

CZ reiterated that holding crypto in one’s own wallet is “not risk-free” and postulated that “more people lose money holding their own — lose more crypto when they’re holding on their own than on a centralized exchange.”

“Most people are not able to back up their security keys; they will lose the device [...] They will not have the proper encryption for their backup; they will write it on a piece of paper, someone else will see it, and they will steal those funds,” he explained.

The Binance executive also stated that even when self-custody funds are properly managed, “if a person passes away, they don’t have a way to give to their next of kin,” while custodians like Binance can implement a “standard operating procedure” to solve that problem,.

https://cointelegraph.com/news/only-1-of-people-can-handle-crypto-self-custody-right-now-binance-ceo

Here's a new reason which RickDeckard flagged up here: https://bitcointalksearch.org/topic/m.62374464

The SEC has filed charges against Binance, and are ordering them to hand over all customer deposits, coins, assets, private keys, and anything else to the US government.

You are crazy if you are still holding your coins on a centralized exchange after the shitshow of the last few months.

You don't have to break the exchange rules and regulations before they seize your assets, if this is the case you can still make some amendments, they will have to make sure you pass your KYC verification and your assets will be released.

Unless you are a criminal, maybe you stole some assets and try to sell on their exchange and they noticed, they will seize the assets and you aren't getting them back again.

Another way to lose your asset to exchange is if you are using a scam exchange like FTX, I am sure that those who have assets on FTX lose a lot of money, so be careful which exchange to trust.

People agreed with the terms of the exchange in terms of creating an account and one of this is submitting their KYC and of course, makes a deposit to their platform, someone of the seize of the exchange is the requirement for personal information to make a compromise with the current status of their account to get into a higher level with higher perks of course, this time, once they commit a deposit the asset of yours, are now limit into in some transactions for example withdrawal limit, the address restriction, its not your funds already because you don't have a private key same with the hot and cold wallet, you are now using a centralized platform and obey their rules and conditions.

Don't be surprised about this pal, as long as it's a custodial arrangement, they can do and undo it if they want. However, I am surprised about your defence of Coinbase, do they have such integrity and review that much? I say No. They might be careful with the Yankee people though. For the avoidance of doubts, take your time to investigate with more people both offline and online, you will realize that they are not worth defending.

Some assets might not be legal, and they will use the opportunity to blackmail the owner to seize it, but do they declare it? That's the point. While some would be legal but might want to do more investigation or even scare the owner if they can reap them off.

This approach is not new in the world of trading and investment, and even in banking and other financial institutions.

It's possible and it happens to some users that have violated the terms and usage of these exchanges. Also, if they've got "hot" funds then they will really be subjected to seizure or freezing of funds. If you know what I mean by hot then that's it.

Another reason is the one that we don't like to happen and that is when there's an actual trouble that could affect everyone's fund on that exchange that's about to go bankrupt.

So if our funds are in exchanges, anything is possible to happen and it's also possible that we might not get it back if a bigger problem occurs but hopefully it won't happen to most of us.

Most times people do not read or even research on what they are about signing up for. They just feel all is feasible at their end signing up for such and they forget that organizations have their policies and guidelines for anyone to stay with them. After signing up they fail to maintain and act in accordance with the organization policies unbeknownst to them and their assets or investment frozen, they start complaining and crying foul.

OP, maybe your friend must have act against the policy guiding coinbase and their clients together which she signed up for.
Possibly identity falsification, maybe transaction traced to any pyramid scheme involving your friend wallet address,  involving in gambling etc
These are just few reasons amongst the reasons why coinbase might likely freeze one's account. Maybe you should ask your friend because s/he is in a better position to tell you what really happened.

These exchanges capitalizes on the user's acceptance of their terms and conditions which in a cloak of apparent truth takes away so much lawful rights on our assets in their custody from users to them. And they capitalize on any little default against these ToS which many users don't even take time to read before embarking on registration with these exchanges most those with kyc requirements. Most of them find it at ease to monetize users information to the knowledge of the authorities, and so in my opinion I don't think they really do deserve my kind of respect per say.

You Just remembered me of their Reserve Drama. At the End of 2022, Binance moved 1.8 Billion USDC from their reserve to an unknown address. Those 1.8 Billion were reserved (backed) for their BUSD. According to the rules, If they move a single Dollar from the reserve, They have to burn a BUSD. But they did not do that. As a result, Coinbase de-listed their BUSD. Coinbase said According to our observation BUSD is not following the criteria to be listed on our exchange.

On 17th August, Binance withdrew 3.63 Billion USD from the reserve wallet. They had to burn 3.63 Billion BUSD if they moved them. But, Binance did nothing. I am 100% most of the Binance users, or BUSD Holders don't know that. After that, Binance returned 1.85 Billion to the reserve wallet address. The rest of them were moved to an unknown address. Justin Sun was involved in this drama. Forbes reported about it, but CZ claims they were spreading FUD.

Look What CZ said; https://twitter.com/cz_binance/status/1630466326102777859?s=20

They simply beleive in what majority is doing and are lazy but the greed factor constantly drives them to these platforms and deposit their funds with them forever.The 3AC meltdown and voyager becoming bankrupt was a lesson for these people that they are actually using your money not thier own funds so at last it's your loss but still they keep repeating the same shit and having their funds with these centralised platforms.They simply don't care to look at these details where they clearly mention about that your funds are their and can be used according to their wish while you can't have right over it.The coinbase SEC filing also disclose that user funds are not liability but company's assets which can be used to pay off debts in case of bankruptcy so what else do you expect from them? But as usual the percentage of these people is huge until it happens with them.

FTX literally scammed millions of users. Their behavior cannot be called anything other than nasty and scammy - giving users' funds to their friends and family, directly stealing users' funds to buy personal items and even property, keeping zero accounts, and so on. And yet, millions of customers.

BlockFi, Celsius, Voyager, all the same. Millions of users, billions in funds, handing it out to random third parties with no due diligence, no safety controls, no collateral, and no protection. Utterly awful behavior, and yet, millions of customers.

As John Abraham has pointed out above, Binance literally scam their users. And never mind their failed proof of reserves, their printing coins out of thin air, their stablecoin which has been shutdown by the government, all the lawsuits they are currently being targeted with, their scamming newbies in to using their centralized shitcoins instead of bitcoin, buying ranking sites and putting themselves top, the list is endless. Their reputation is atrocious. And yet, millions of customers.

Reputation and previous scammy behavior account for nothing in this space. There is an endless stream of newbies who will sign up to literally any old shit platform and hand their data and their coins to literal scammers on the promise of 10 bucks of shitcoins or some obviously unsustainable ROI.

Whatever you say, I don't want to give them extreme power by blindly accepting all of their TOS. You may say they are not practicing such things with their users. Well, they do. Binance had a bad habit of applying their Controversial TOS against their users. During the Dogechain upgrade, Binance Mistakenly did some transactions twice a few years ago. It was their developer's mistake. To recover those funds, Binance locked their user's accounts and asked them to deposit to unlock their account. Imagine you withdrew 500K Dogecoin to an unknown wallet address about a year ago.

After a year, Binance sent another 500K Doge to this address, and now they ask you to return that amount. You may don't have access to this wallet anymore. How would you return them? Also, There was a massive pump of Dogecoin. Just imagine your 500K Doge was worth $100 only. But, when Binance asked you for a refund, 500K Doge was worth around USD 80K.

You can read more here https://bitcointalksearch.org/topic/binance-stuck-my-withdrawal-5370726

This is the result of the Ultimate power of Their TOS. They blocked the user's account and confiscated the funds for not refunding the money, which was sent to an unknown address.

It's an interesting thread but we shouldn't confuse theoretical legal terms with reality IMO. Exchanges need to protect themselves against abuses and lawsuits but they mostly need to make business, and fortunately you don't attract customers with nasty commercial behaviours, bad reputation or scammy practices.
For example, you've quoted the ToS of Binance in first place but actually they seem to be far away from applying those terms so strictly according to the CFTC.

https://www.cftc.gov/media/8351/%20enfbinancecomplaint032723/download

Goes right back to my point about: Laziness and greed.

When the likes of Voyager and Celsius were offering 80% interest or whatever ridiculous, obviously unsustainable percent they were offering, people signed up and threw their bitcoin at them without a second thought. Even when I posted repeatedly about how these platforms' Terms of Service clearly said that they would be lending and spending your coins without any kind of protection, collateral, safety nets, etc., people in those threads didn't care. And then when these platforms went bankrupt, almost everyone who used them was surprised to learn what was going on behind the scenes, despite it being clearly spelt out in their Terms right from day one.

People don't care until it is too late.

Not only you. I believe most forum users don't know what is hiding behind their TOS Power. Their TOS is their power. I had a little conversation with o_e_l_e_o here, and then I decided to create a new thread to give a warning to forum users about the TOS of Centralized exchanges. You can find it here; Do you know what is hiding behind the Centralized exchanges User Agreement?. Guess what? Very few people read that, and I don't think people are interested to know what is hiding behind their TOS.  

Still, I hope people will search on the internet, and I hope they can find my topic in one of the search results. I can scream and write TONs of words on the internet, and people won't read and hear me until they suffer from the same thing. At least you read and responded here. Many people don't.

You always have options on the market. Centralized Exchange's trading volume is huge (Over 99%). You shouldn't hold your funds there. You can use them to exchange your coins unless you do not have any options out there. Still, I would suggest avoiding them if you can.

I agree with you, for unknown reasons some people are spreading FUD against them and all other reputed CEX but actually they are very unlikely to seize your funds just because you're using them to play at a casino, to buy adult content or some medications with them. They can close your account, but they are very unlikely to seize your funds for that, otherwise we would be seeing many complaints against them in the Scam Accusations section. They may lock your funds if the KYC is missing, but it's very uncommon to happen for an improper use or because they have been sent or received from a blacklisted address.

This should be one of the most sensible and expected reason out of the many as to why a centralized exchange can seize your funds, because ever before using a centralized exchange, you should know you can't use it without submitting KYC. There are many other flimsy, unexpected reasons as to why they can abuse their power and seize your funds, and these reasons occur more often imo.
They are not better than the fiat system. Bitcoin is much better than the traditional fiat system, but centralized exchanges are completely antithetical to how Bitcoin functions, they are centralized just like the fiat system, but laden with far more risks and cons.

Good job on reaching this realization - many people never get there. You have the nail on the head: What is the point of using a decentralized currency if you leave it entirely in the control of centralized third parties? Indeed, using bitcoin via centralized exchanges is not just as bad as using fiat, but in many ways it is actively worse. CEXs lock accounts for secret and arbitrary reasons for more often than fiat banks. With fiat banks, there is a legal process you can go through to have your account unlocked, whereas with CEXs you usually just lose everything. CEXs exit scam and disappear at an alarming rate. Most banks are insured, while most CEXs are not.

If I hold cash, then yeah, it it going to constantly devalue, but the cash will still be there tomorrow. If I hold bitcoin on a CEX, then who knows if I will still have access to it tomorrow, next week, next month?

That's just one of the reasons, but what about all those who did KYC, and then it happens to them? They (CEX) simply do not have to tell you the reason why they blocked you or why they froze your funds. In my opinion, what causes the most problems for users are automated detection systems that have an excessive rate of false detections, and then the people who check these reports have to "manually" check it all.

In other words, it looks like a fisherman throws a hook into a shoal of fish looking for a specific one, and in most cases he hooks one he doesn't want. CEXs unfortunately catch too many "fish" that should not be on the hook.