Topic: What could make an exchange to seize users assets (Read 717 times)

It's not like the exchange really cares, but they're bound by regulations most times. They are on a thin line and any mistake they make regulatory bodies will be coming in hot. So they do things like this to take pressure off of them a bit.
I know a guy that Binance seized the coins in his account because he used his account to receive money that turned out to be gotten through fraud. They froze his account and reported him to the authorities.


Damn! It just keeps getting scarier.
But is there a way to prove that what they (coinbase) are saying is not true?

The government can't and doesn't want to be blamed for this. When KYC laws are made, ' also automatically provide a set of identity protection laws for users that service providers must then implement.
I think these services don't expect data leaks for the sake of their business continuity. But they can't predict how it will happen, let alone identify their employees who will do it. However, most of the data leak cases that I've heard of, it won't be until the shutdown of the service, only the parties involved (individually) will be brought to justice.

A nation-state level attack does not need the identity of 60% of the population - the identity of a small handful of the right people is more than enough to pose a national security threat. The protections against such an attack are from the final destination not being fooled by the false identity - it is already far too late to prevent the leakage of KYC data. But the vast majority of attacks are not from nation-states looking to compromise national security, but from individuals looking to take out $200,000 in your name.

That matches the data I shared in this post: https://bitcointalksearch.org/topic/m.62337285

Corporations leak user data on a massive scale. Wikipedia's list includes 33 different leaks over the past 15 years, in which data from 100 million or more users was compromised alone. Another 58 records of data loss from 10 to 100 million. The top 5 leaks affected data from half a billion to 3 billion users each. And all these corporations still continue to work, although some of them are marked on the list more than once. You can draw your own conclusions about whether such leaks are a national threat in fact or not. But it is always better to take care of your own information security on your own.

I already mentioned in another topic that, according to Britannica, in 2021 alone, 42 million Americans (more than 12.5% of the country's population) were victims of identity theft, the total loss was then $52 billion. It is very risky to go through KYC thoughtlessly wherever they ask for it.

Imagine that 60% of Ireland's population (The current population of Ireland is 5 million people) is registered and KYC verified on Coinbase and one day there is a data breach, boom, KYC documents of 60% of Irish people is publicly available. Isn't that a national security threat?
It's also a national threat for the USA that its citizens are uploading their KYC data on Binance?

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Btw it's very interesting to know if anyone here become a victim of a data leak (taken loan, etc) and hired a good lawyer and won the case. I can't find similar accidents. It's really very interesting because 1 part (government) pushes you to submit KYC to 2nd part (exchange for example) and this 2nd part leaks your data and you experience financial loss. Logically, you are a victim of these two and it's interesting to know how does the judge looks at this case.

All Coinbase have to say is that your coins triggered some secret algorithm which made them suspect theft, money laundering, darknet use, gambling (in some jurisdictions), or some other use your government dislikes, and not only does it become legal for them to seize your coins, but it becomes actively encouraged by your government.

An attacker with your details can ruin your life, commit fraud in your name, take out loans and credit in your name, but the government don't give a shit about any of that. That's not a national security threat, just a personal threat, and your government does not care about you. Plus the government can then tell that exchange to hand over all your financial activity which they can definitively link to your real identity. No government in the world would pass up on this kind of freely given mass surveillance.

By the way, isn't it illegal to take away someone's money without his permission? That's their ToS, actually. Legally, there should be a confirmation from both sides to keep money but Coinbase says that they can keep it without your permission with no further explanation.
I sometimes think about this and can't understand, why do governments push exchanges or any other services to gain KYC documents of their customers. Isn't it a national threat for governments that random exchanges collect KYC documents of their citizens? Especially when there are so many KYC data leak accidents.

That's right, unfortunately, as soon as the money gets into a centralized organization, users immediately find themselves in a disadvantaged position. And the government not only takes a side of a centralized organization in disputes, but passes numerous laws to encourage users to deposit their money in centralized organizations, as well as to reduce the use of decentralized forms of money like cash or bitcoin.

To stay in the good books of the government is the best answer, and thanks for this and as you stated above, if the exchanges are I'm the side of the government, freezing a user's coins out of millions will in either way be a win situation for the exchange.


It might not be a global conspiracy but the conspiracy is jurisdictional and the exchanges and the government on one side vs the customers and bitcoin on the other side.

This is not a global conspiracy. There is also the influence of governments who want to have the same control over bitcoin that they have over fiat currencies. And ersatz bitcoins in the accounts of the exchanges allow them to control the bitcoins of those who store them on the exchanges. Therefore, both exchanges and governments are interested in keeping bitcoins on exchanges. The common interest contributes to the fact that they work in the same direction, while without any secret conspiracy, all their motivation is in plain sight.

All ersatz-bitcoins on the accounts of exchanges, banks or any other are inherently fiat. The real bitcoin is only on the bitcoin blockchain.

You can write it, but it will be unenforceable because it is illegal. However, there is no law saying centralized exchanges cannot freeze accounts or confiscate coins, and indeed this behavior is often supported or even required by various governments.

To stay in the good books of the government of the jurisdiction they are operating in. They might lose profit from that user (unless of course they just seize the coins and keep them for themselves), but that's preferable to being sanctioned or shutdown.

Wow! Another dimension of the story and I never thought or reasoned it from this angle. My idea of the reason exchanges seize or reject their so termed unclean bitcoin is because of the regulations imposed by the government in whose country they operate.
I have long thought that it is the war of the government vs the people and exchange. But right now you are making me believe the exchanges are even the master minders of all these.
But I still have my doubts. Why should an exchange reject a coin or frustrate it's flow knowing so well they will make money from the movement or trading of the coin?

When you create a company like Coinbase, can you legally include everything the way you want in Terms of Service? I mean, if I create a company in the USA and write in its ToS that by clicking on Agree, this user confirms that she will be my slave and do whatever I ask her to do? Can I legally write that? Because this is how Coinbase's ToS looks like. How can that be legitimate? There are lines that one shouldn't cross, this is no more different from slavery. Company (owner) has all the privileagues and customer (slave) has 0 rights. It's disgusting, my vote for DEX every day, every time!

It has always been dangerous to use centralized exchanges and the reasons to not use them is endless. Classifying bitcoins according to how clean or not they based on their description is just another reason to hold your coins in your non custodial wallets and use decentralized exchanges.

They already have a fair share of control and we cannot wish that away. Only education and more veteran users promoting the use of decentralized platforms and the risks of centralized ones can help this.
Also not compromising with statements like;
- "You can use them, but take your funds off them as soon as possible"
- "Only hold what you are actively trading"
- "Use them for the sake of liquidity".

And any other excuse to promote Centralized exchanges that is used.

- Jay -

Yeah, definitely they won't succeed. They may put some burden and problems that many are going to be skeptic of what bitcoin is and they'll drop it down because the regulators and even the exchanges are implementing strict policies towards users. Another thing is, if they want a customer to freeze their funds, they'll do no matter what the reason is. They can always tell a lie and a thousand reasons why they're doing that because they've got policies that couldn't be disclosed to the users as there's always the pressure behind their back made by the regulators.

Since exchanges have begun blocking funds also on the basis of how “clean” they "think" bitcoins are or not, it has become increasingly dangerous to use centralized exchanges. They strive to make users afraid to withdraw funds to their wallets at all, so that later their coins will not be recognized as "dirty". They don't just want to get all our bitcoins and manage them themselves, they want to intimidate users into not wanting to get bitcoins outside of centralized exchanges (where it's not real bitcoins). Real bitcoins are only inside the bitcoin blockchain and nowhere else. And centralized exchanges are trying to gain control over real bitcoins with their division of bitcoins, but they still won’t succeed!

All working as intended. Hand over your coins to centralized third parties, they will invest/loan/gamble/spend/steal your money to make profits for themselves while passing all risk of loss on to you, and if you want to actually get your money back then they will make it as hard as possible for you to do so. Look at the multitude of centralized third parties which were doing exactly this over the last few months - FTX, Celsius, Voyager, BlockFi, the list goes on. And now all the users of all those platforms have lost everything.

It is insanity for anyone to still store funds on a centralized exchange.

Go one step better: Don't use centralized exchanges in the first place.

When I first got involved with bitcoin, it took real effort to avoid centralized exchanges entirely and to only buy and sell completely peer to peer without any third parties. As time has gone on, it's become easier and easier. There are now multiple platforms to choose from, with built in non-custodial escrows and other such features which make the process faster and safer than ever.

https://kycnot.me/

•   Inability to complete KYC or provision of wrong data for KYC
• Non compliance to the rules of trade or P2P
•   If the law enforcement agents demand so
• If the exchange decides to do so without any reasons
• Use of tilted coins
• Loggin in your account with frequently chnaging IP address and etc

Those points and more is given not based on the story of your US based friend. Not your key, Not your coin. They can freeze your fund anytime without your permission.

While I can't speak directly to that particular issue of Coinbase seizing user assets, what I can tell you is that I once had my Wells Fargo bank account shut down without warning for conducting trade with Coinbase.

IMHO, there is already a substantial effort to stop bitcoin without having to go through the legal loopholes. Everything from market manipulation to massive power plants being developed exclusively to mine bitcoin and bankrupt pleb miners.

"They" (the banks/Coinbase etc.) are absolutely seizing user funds that are stored on their platform. They will even make up completely bogus charges and put the onus on you as an end user to prove that you aren't doing anything illegal with your own money. I know we all say it but "get your coins off of exchanges as soon as you can."  Custodial bitcoin is the largest contributor to bitcoin price suppression and leading cause of rug pulls.

If I wanted to entrust my money to someone, then the choice immediately becomes so big, everyone wants to "help" me cope with all the difficulties that I may encounter. Such kind people! And as soon as my funds are not with me, it suddenly turns out that for my own safety, I can’t use my money in any way unless I go through the KYC procedure, which is approved by whoever now controls my money. And then suddenly I'm not me anymore?

And then it turns out that I want to use my money for the wrong purposes, so it will be safer if they remain in the custody of someone who knows better than me how to properly dispose of them.

And then that someone gets "hacked" or just goes bankrupt and sends my KYC verification details to any scammers willing to pay for it.

As far as I can see, most on this forum have not lost any money from their own open source non-custodial wallets. But problems with centralized services appear one after another.

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.

These findings has created a new thought pattern for me. I would never even think that such power could be accorded to an exchange I downloaded or registered on to hold my coins.
I would have to read the user agreement from now on before joining or using an exchange, because what's the point of using a decentralized network if it isnt decentralized?
 If it is controlled by other external bodies, even upon completion of my KYC verification and adherence to its functions for my benefits, why would my account be frozen without an explanation as to why?
Unless I falter, still a notification should be sent out to me the user, because it is not only such app that I have to adhere to its user agreement. I may not even remember what I read on its user agreement page nor even remember the limitations imposed to prompt such a freeze of my account. What now makes them better than using a fiat system?

The most reason why exchange seize user's asset is not being verify account, which is the most policy for many exchange, which everyone has to verify account as know your customer (KYC) before funding.

The truth is that CEX (centralized exchanges) can do whatever they want with your account and that in most cases, an ordinary user cannot do anything to change it. Those few who can afford a lawyer and engage in a court process can expect an expensive and protracted battle, and we know that the small ones have a hard time winning the big ones.

Because of all this, using CEX is even riskier, because it is not only a matter of possible hacking, phishing or theft of your personal data, but also the possibility of losing your funds at any moment, without any explanation.

Any exchange can make a seizure of your asset by many ways as long as they are centralized, it has been placed in two category of seizures, first is when the exchange itself take full responsibility for doing that due to KYC related issues or AML protocols when your account is suspected with involvement in some sort of suspicious activities, second is that the centralized exchanges can also be attacked by scammers and bring down the entire people's asset and cart them away.

There could be many things that may lead to the funds being frozen by the exchanges, Those people may have violated the terms and conditions of the casino which may include the use of VPN. Multiple accounts and funds being transferred from illegal sources and so on and on.

There can be number of reasons for this where the good exchanges like coinbase or binance can freeze user's funds.

And there may be unlimited number of excuses where scam exchanges can freeze users funds and not let them withdraw.

Coinbase is not the only exchange that is guilty of this nonsense of suspending user's accounts, other exchanges like Binance, Kucoin, and other top-tier exchanges do this thing. I personally know a friend that had about $1750 on his Binance exchange account and they suspend the account in late 2021 without any reason, they only told him that the account is suspected of some activities and they have to review and investigate before they will release the account and till today, nothing has been done on the account.

The only lead we had as the reason why they might have suspended the account was that the guy was using VPN and it is always on his phone but that is not enough reason to block the account, if they fear US law and compliance, they should have warned him in the beginning and adjustment can be done by stop use of the VPN but all of sudden, they call for suspending of the accounts, fear centralized exchanges. 

Mostly such kind of cases like freezing funds comes from Centralized exchange like coinbase which you had mentioned and many more. Mostly they freez fund of Thier customer on different bases like not providing KYC or submitting wrong information, some time payment of some illegal sites from your account and many more.
So the best option for everyone is to use decentralized exchanges which will provide you privacy and where you can feel safe.
But instead of centralized and decentralized exchanges you can you your hardware wallet where safety of your fund will be 100% sure.

One of the reasons why an exchange will seize your assets is when you place an order to sell your assets, but after receiving payment from a buyer, you fail to release the assets to the buyer. In this case, the buyer will have to report you, from the report your problem has started if you don't rectify the issue.

Its seems not clearly reason about Coinbase account seize and freeze the user assets, not to get respond from both side between victim until his account seize and not ability withdrawing his assets and one side need respond or reason from Coinbase why account have been freeze. I have longer time with Coinbase and my fund still secure without any problem due have pass KYC.

I think problem with KYC or user can contact with Coinbase support ask what have to do and get back his account, I sure have solution for both side between Coinbase and user with account have been freeze to get back his fund.

Generally the exchange authorities do not easily freeze the funds of their customers or users, but sometimes for special reasons they can temporarily freeze the funds of the customers.
Personal information ,If a customer has placed the personal information wrongly i.e. if he has submitted wrong information while doing KYC, then the exchange authority can freeze his funds temporarily.
Illegal funds,If a user transfers funds from an illegal source, the exchange authority may freeze the user's funds permanently.
Location,Many times, if the user's location is in the restricted list of the location of the exchange, then the exchange authorities can temporarily and permanently freeze the funds in the user's account while transferring funds to that location.

@OP, According to the information provided by you, the female user has committed any illegal activity against the Coinbase rules or against the terms and conditions under which the exchange must be used. Because of this, the Coinbase authorities have permanently frozen the user's account funds.

It sucks to use that exchanges seizes customers funds and can't even tell them the reason if their actions. This means that the moment you sign up with them and keep your coins in the custody,it is no longer your coins because they can do whatever that they like with it and you don't have a voice on your own funds.

It is much better to deal with decentralized exchange like bisq,which it quite safe,than giving your hard earned funds to exchanges who are not trusted and can freeze your access due to their own selfish interest. Too many nonsense reason why a customer funds should be freeze  Not your keys not your coins

Crypto exchanges can seize users fund for reason like
receiving stolen funds
discrepancies in details submitted during account registration or insufficient info during AML process.
use of unsupported tools in ones account.
there are lot to mention And these exchanges will never give you reasons because of confidential reasons.

It can happen for any reason and they don't even need to give you real explanation why they froze your coins.
They can claim your coins are involved with some hacks and stolen funds, or they can say your source of funds is suspicious, and it can even happen because of you location.
This can happen with all centralized exchange, not just for Coinbase but I think Coinbase is going to be inbig trouble because of connection with USDC so better withdraw coins to your own wallet.
You can use P2P trading and decentrlaized exchanges, than you dont have to worry that someone will freeze your accounts.

Possibly this one. There are lots of incident were am account was locked due to malicious funds that coming from somewhere or has been flagged by the exchange and he keeps getting funds from that. Mostly gambling sites, or another one might be the lack of personal identification of the person that needs to give up.

It happens with many exchanges- not just coin base, any government-regulated exchange can freeze your funds for any reason, from suspicious transactions to money laundry or even inadvertently buying bitcoins or crypto assets that have been blacklisted or used to fund illegal activities. That is why buying bitcoins in the streets and then sending it to a centralized exchange can sometimes pose a problem.

This will only happen if coinbase find suspicious activity on your account and you cannot provide proof of identification that you own the account for sure in this case the users funds will get freeze until he can provide the necessary requirements ask by the platform. Also read the term of service since there are written rules regarding on how you can avoid your account to get lock up.

Check out some decentralized exchanges: https://kycnot.me/. You might find some local activity.

Yup. Every centralized exchange is the same.

By all means, but these platforms have already collapsed and declared insolvency (exactly because they were doing what I highlighted above - gambling all their users' deposits in order to try to make themselves more profit).

It's impossible to read the terms for every single website or service that you use, but when it comes to something that you are going to be sending money to, then people should really take the time to figure out just what they are signing up for. In the case of centralized exchanges, it is usually a case of signing away all your coins, all your privacy, and all your rights.

After reading this post. I checked the user agreement of the most trusted (?) Exchange that I use as well. It's Binance. I use this platform to trade with my locals because I do not have other options to trade with locals. I checked Binance and Kucoin user agreements they literally said they can terminate your account and seize your fund for any reason without giving you any explanation. Also, they won't give any explanation to a third parties including the law firms as they already have the rights because you accepted the terms and conditions when you signed up.

This is the mistake we do as users. I myself never bothered to check full terms and conditions before I sign up. That's sick.

Pretty much every centralized exchange has words to the same effect buried somewhere in their legal documents. The fact is that as soon as you deposit your coins to any centralized exchange, they do not belong to you and the exchange can do anything they like with them, including simply keeping them for themselves. It happens all the time, but everyone thinks "Well, it won't happen to me", right up until it does and they lose all their money.

The exact same thing happened with the likes of Celsius, Voyager, and BlockFi. Here's a post I made several years ago warning people about these platforms: https://bitcointalksearch.org/topic/m.56289293. In it, I point out that their terms quite clearly state that they will lend out, gamble and sell your coins, all while keeping zero collateral, and you have absolutely zero rights if it all goes to shit. Fast forward several years and these platforms collapse because of this exact reason, and all their users are shocked that they were engaging in the exact behavior they said they were engaging in, because none of the users had bothered to read the terms.

For me, maybe your friend received her assets from a red flagged wallet. In this case.,some exchanges will freeze the receivers account or disable the account from trading. Ive seen cases related to this on Binance and the owner account was disabled from trading.

A common issue when it comes to centralised exchanges, coinbase or other exchanges have policies that they can freeze your assets and block your account anytime if you don't proof the ownership of your account or if you fail to convince them that you are the rightful owner of that particular account.

You can find many cases on the internet about account freezes of centralised exchanges.

Yes and there are many reasons that could warrant them doing that, but the first mistake comes from the user by leaving a whole numbers of decentralized exchanges for centralized exchanges, so if you're using a centralized exchange, know it that you're one of the anticipating aspirant for this kind of experience with ceisure, while at the registration point you provided them with KYC information and they use it to track you, the AML agencies comes after you through them as well and track any suspicious move in transactions you made, they got attacked and their system get hacked all your asset gone as well.

Actually account freeze is the number issue of coinbase before they become this huge exchange that’s is now regulated by the US. The only reason that coinbase will freeze someone account is the potential violation of there T&C. It includes bit not limited to suspicious activity on your account. I believe most of the CEX has this kind of condition for their exchange.

I believe there’s a lot of issue like this against coinbase way back 2017 when the first ICO boom in crypto market because there’s a lot of investors depositing on coinbase using fiat to invest on startup projects.

Cryptocurrency exchanges are obliged to adhere to regulatory requirements that vary based on their jurisdiction. These requirements may encompass tasks such as verifying user identities, monitoring transactions for suspicious activity, and reporting specific transactions to government entities. If a user fails to conform to these obligations or if their transactions are identified as suspicious, the exchange may be bound by law to temporarily freeze their assets until the matter is appropriately resolved.

Yeah, In my previous post, I also suggested OP to read this;


Would you use such a service If you knew they have the right to do such things with your account and funds? I don't understand why OP respects Coinbase so much, but this is the sickest user agreement I have ever read. To be honest, I didn't read their user agreement before today. But I wanted to dig into the reason, and I was shocked.

I believe over 95% of Coinbase users don't know about this. Almost no one reads the user agreement when they sign up. If anyone does, I don't think they will end up signing up on Coinbase after they find what coinbase can do. Almost nobody knows what's hiding in their user agreement page. I Believe it needs a particular thread with awareness, and people should know about this.

There are a lot rules you can find on Coinbase where they stated you need to follow all of their terms of services otherwise they will ask you to submit KYC and then they might seize your funds or terminated your account. After all it's depends on the Coinbase to punish you and you have no way to complaint since they will always right. Think twice before using any centralized exchange even though you're only use it to buy and sell your coins, they might not allow you to withdraw and you need to handle this problem.

Many of such cases. I'm sure if you count the unreported isolated cases it would reveal a much higher number.

I have no idea why you would respect coinbase. It's an anti privacy company which has been reported to be sharing user details to government authorities, or selling them in some cases, among so many other ills.
Why they can seize someone's funds is simply because they can. You give them the authority to do that when you sign up and agree to their terms.

While everything you have said is true, Coinbase's policies are far more wide reaching than that. They essentially give Coinbase the ability to close your account and seize your coins for literally any reason at all, and there is nothing you can do about it. For example:


At any time, for any reason, and they won't even tell you why, let alone let you appeal against it.

And as we have seen from several recent court cases and bankruptcy proceedings, the instant coins are deposited to a centralized exchange, then legally speaking those coins belong to the exchange and you have absolutely no claim over them. There are thousands of such users who have had various centralized exchanges simply seize their coins with no explanation ever given.

Yes. If you search for such result on the internet, You will find plenty of users' account was frozen. Coinbase has a big list of reasons that can cause freezing your funds. Most probably, your friend deposited Crypto in Online casinos or paid for adult content and services. Or maybe invested in pyramid Schemes. Most Users do not read the User agreement before they sign up.

Coinbase Prohibits Plenty of Businesses like Investment and Credit Services, Restricted Financial Services, Intellectual Property or Proprietary Rights Infringement, Counterfeit or Unauthorized Goods, Regulated Products and Services, Drugs and Drug Paraphernalia, Pseudo-Pharmaceuticals, Substances designed to mimic illegal drugs, Adult Content and Services, Multi-level Marketing, Unfair, predatory or deceptive practices, High-risk businesses.

Coinbase itself mentioned why they could freeze your funds:


For more detailed information, I recommend you read this:

[1] Does Coinbase freeze accounts?
[2] Coinbase Prohibited & Conditional Use Policy
[3] Coinbase User Agreement _{Read from 6.1 to 6.3 SUSPENSION, TERMINATION, AND CANCELLATION.}

If I were to guess, the most common issue is lack of proof-of-personal identification. Coinbase is a public American company that's obviously highly regulated, hence requirements will be greatly extreme.

But since you know the person, maybe ask her what what Coinbase's reason for seizing her funds?

Coinbase exchange was launched in 2012 right? Have there ever been any cases of users' assets being frozen and never released to them? I know someone living in the united states, she said that Coinbase seized her crypto in 2020 within that COVID-19 period and to date, the assets were never released back to her. I respect coinbase so much and I am curious why such a thing would happen.