What could make an exchange to seize users assets

[Frankolala]

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

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[LDL]

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.

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.

[armanda90]

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.

[Sunrise360]

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.

[ZAINmalik75]

Coinbase exchange was launched in 2012 right? Have there ever been any cases of users' assets being frozen and never released to them?

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.

[Cookdata]

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.

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. 

[virasog]

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.

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.

[Dunamisx]

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.

[Lucius]

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.

[RiverBoy]

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.

[Cryptomultiplier]

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.

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:

In extremely rare circumstances, and only where required by law or authorized by the Coinbase User Agreement, Coinbase may block or "freeze" customer funds on our platform. For example, we will take this action when:

We are required to comply with an order from a court or other authority that has jurisdiction over Coinbase which compels us to restrict access to funds.

We are required by law to freeze or block assets in compliance with a sanctions program, including, but not limited to sanctions programs administered by the U.S. Office of Foreign Assets Control (OFAC).

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.}

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?

[Lucius]

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.

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.

[o_e_l_e_o]

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?
...
What now makes them better than using a fiat system?

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?

[Coyster]

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.

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.

What now makes them better than using a fiat system?

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.

[Saint-loup]

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.

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.

[John Abraham]

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?

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.

[o_e_l_e_o]

Guess what? Very few people read that, and I don't think people are interested to know what is hiding behind their TOS.

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.

[Saint-loup]

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.

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.

104. Internally, Binance officers, employees, and agents have acknowledged that the
Binance platform has facilitated potentially illegal activities. For example, in February 2019,
after receiving information “regarding HAMAS transactions” on Binance, Lim explained to a
colleague that terrorists usually send “small sums” as “large sums constitute money laundering.”
Lim’s colleague replied: “can barely buy an AK47 with 600 bucks.” And with regard to certain
Binance customers, including customers from Russia, Lim acknowledged in a February 2020
chat: “Like come on. They are here for crime.” Binance’s MLRO agreed that “we see the bad,
but we close 2 eyes.”

105. Lim’s internal discussions with compliance colleagues illustrate that Binance has
tolerated Binance customers’ use of the platform to facilitate “illicit activity.” For example, in
July 2020, a Binance employee wrote to Lim and another colleague asking if a customer whose
recent transactions “were very closely associated with illicit activity” and “over 5m USD worth
of his transactions were indirectly sourced from questionable services” should be off-boarded or
if it was in the class of cases “where we would want to advise the user that they can make a new
account.” Lim chatted in response:
Can let him know to be careful with his flow of funds, especially from darknet
like hydra
He can come back with a new account
But this current one has to go, it’s tainted

106. Lim’s instruction to allow a customer “very closely associated with illicit
activity” to open a new account and continue trading on the platform is consistent with Zhao’s
business strategy, which has counseled against off-boarding customers even if they presented
regulatory risk. For example, in a September 2020 chat Lim explained to Binance employees
that they
Don’t need to be so strict.
Offboarding = bad in cz’s eyes.

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

[John Abraham]

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.

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.

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://bitcointalk.org/index.php?topic=5370726.0

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.

[o_e_l_e_o]

and fortunately you don't attract customers with nasty commercial behaviours, bad reputation or scammy practices.

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.