CryPicture this: You have finally found the courage to take the plunge into crypto. Everything is going well for you. You’re mastering the tricks to optimizing your investment, and you’re looking forward to a satisfying in-space experience. n it happens. Log into your account and find that you are no longer able to log in, let alone transact. In a panic, you try customer support to no avail. You are now concerned about the safety of your funds. You can’t help but wonder how you got here. Is it something you did? Will the situation be resolved amicably? How long will it take to do this? It is not a far-fetched reality to find your exchange suspending your account. So why does this happen? Are there documented cases of such suspensions?
Also, what can you do to correct the situation if you are affected? This article describes the reasons why an exchange will lock your crypto funds. It also describes how you can fix the problem. Without too many words, then let’s jump in.
5 reasons why your cryptocurrency exchange froze your funds
Your exchange can provide various reasons for blocking access to your account. Here we discuss the five reasons why crypto exchanges lock user accounts.
1. y have noticed suspicious activity on your part.
One of the reasons your account will be blocked by your exchange is if they detect suspicious activity on it. In an effort to curb crypto crime, exchanges have installed tools to detect crypto funds linked to illicit activities. CipherTrace A technology tool, for example, allows exchanges to report potentially risky transactions. Again, you can determine if the transactions involve a prohibited region or entity.
It also classifies suspicious transactions into criminals, gambling, and the dark market. Additional categories include Data Hijacking and Malware. Once the tool flags your account for one of these, your exchange will keep your funds pending validation.
2. You are violating the terms and conditions of the exchange.
Each exchange has its own terms and conditions. By subscribing to a platform, you agree to abide by the established rules and regulations. Any deviation from them is a violation that could lead to account suspension. For example, many exchanges prohibit currency mixing. Participating in this will lead to the freezing of your accounts.
3. exchange is under attack
Although exchanges have advanced their security features, they remain a profitable hunting ground for cybercriminals. Unscrupulous people scour the crypto space looking for vulnerabilities in exchanges. Once they find them, they exploit them.
Several custody exchanges have been the victims of hackers who fled with user funds. Recently, for example, hackers hit Liquid, a Japanese cryptocurrency exchange, for $ 97 million.
When an attack occurs, exchanges are activated to limit the resulting damage. first recourse is to suspend all transactions. This action gives them the ability to protect the remaining crypto funds. It also allows them to plug the loopholes that exposed them to attack.
4. platform is experiencing downtime.
In addition to the blockchain, cryptocurrency exchanges also use internet technology. And sometimes, their systems suffer problems. Most of these interruptions come from the demand for services of a platform that exceeds its capabilities.
A bull run provides the perfect setting for orders to exceed the capacity of a trade. Lured by a bull run on cryptocurrencies, many investors would like to join in on its gains. sheer volume of orders placed overloads the system.
Consequently, the project must come into play to avoid a possible accident. y lock accounts and transactions for a time to ease the pressure. In this way, they allow the exchange of digital assets to return to its optimal functioning at the right time.
5. re is a court order blocking business activity.
Many jurisdictions are beginning to recognize cryptocurrencies. As such, they are increasingly regulating cryptocurrency projects. And sometimes, regulators get court orders to suspend the activities of a specific exchange or accounts. Not eager to conflict with the law, these exchanges have no recourse but to comply.
An example of this is last year’s freeze. Virgilio Capital crypto funds. SEC obtained a court order suspending the former and its affiliates from access to their cryptocurrencies. At that time, the former accused the latter of being an accomplice of one of his administrators. As a result, Virgil Capital and its clients would face account suspensions for the duration of the court order.
Major exchanges that have previously frozen user accounts
history is full of exchanges that have suspended user accounts. Here are some of them:
- Coinbase – swapping is no stranger to account freezing. In December 2020, she drew the ire of her clients, who accused her of freezing their accounts amid a bull run on Bitcoin.
- Binance – Between the end of 2020 and the middle of the year, it froze the accounts of many of its global clients. development team did not explain the reasoning behind the act. However, its May 2020 incident coincided with the BTC crash.
- CoinDCX – Indian exchange suspended user accounts for suspicious activity in January 2021. Those activities had peaked with the BTC rally at the time.
- KuCoin – in late 2020 it froze users’ accounts to deal with a $ 150 million hack it had suffered.
What should I do to recover my blocked account?
Depending on the reason for the suspension, there are several steps you can take to regain access to your accounts. You must first contact customer service for suspension responses. That being said, many do not respond and you would be lucky to receive a response from them.
If it was due to an outage, you don’t have to worry. exchange will restore its functions after solving the capacity challenge.
For other suspension reasons, it may take longer. For violating the terms and conditions of the trade, you will be lucky if your account is restored. It is worse for accounts that have managed illicit funds. If the transactions are proven to be illegal, the exchange will seize your crypto funds.
However, if the exchange has mistakenly flagged your account for illegal activity, they will ask you to validate your details. y will then review your transactions and, if they are cleared, will re-establish your access.
In cases where there is a court order blocking your account, you have two options. first is to seek an alternative court order that restores the function of your account. second is to wait for the judicial process to run its full course. court will then decide whether or not to regain control of your funds.
For a cryptocurrency investor, the frustration of a frozen account is the highest. In no time, you will be in full control of your account and your funds. In the following case, you are stuck and cannot perform the simplest functions. Apart from the resulting panic, we need to know the reasons for the suspension. This article has selected only five of the most frequent. It also went ahead and identified cases where the major exchanges withheld user funds.
He also provided suggestions on steps to take to re-establish control of your account and funds. What remains critical is that you strive to comply with the terms and conditions of the platform. Also, make sure your transactions are always correct. se simple actions will save you the time and agony of searching for funds that you may never get back.
Read also SEC Chairman Gary Gensler wants to regulate DeFi