What could make an exchange to seize users assets

[aysg76]

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.

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.

[John Abraham]

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.

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

[Lida93]

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.

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.

[CryptSafe]

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.

[sunsilk]

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.

[EarnOnVictor]

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

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.

[Peanutswar]

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.

[Z390]

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.

[o_e_l_e_o]

Here's a new reason which RickDeckard flagged up here: https://bitcointalk.org/index.php?topic=5452900.msg62374464#msg62374464

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.

[John Abraham]

Here's a new reason which RickDeckard flagged up here: https://bitcointalk.org/index.php?topic=5452900.msg62374464#msg62374464

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.

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

[o_e_l_e_o]

If I am not wrong, Isn't it for Binance.us only?

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.

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:

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.

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.”

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

[Who is John Galt?]

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

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.

[Jon_Hodl]

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.

[KingsDen]

What could make an exchange to seize users assets

•   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.

[o_e_l_e_o]

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?

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.

I know we all say it but "get your coins off of exchanges as soon as you can."

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/

[Who is John Galt?]

Not your key, Not your coin. They can freeze your fund anytime without your permission.

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!

[tabas]

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!

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.

[un_rank]

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.

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.

And centralized exchanges are trying to gain control over real bitcoins with their division of bitcoins, but they still won’t succeed!

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 -

[Synchronice]

-snip-

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:

6.10. Suspension, Termination, and Cancellation. Coinbase may suspend, restrict, or terminate your access to any or all of the Coinbase Services, and/or deactivate or cancel your Coinbase Account(s), with immediate effect for any reason at its sole discretion and is under no obligation to disclose the details of its decision to take such action with you. You acknowledge that Coinbase's decision to take certain actions, including limiting access to, suspending, or closing your account for any reason in our sole discretion, may be based on confidential criteria that are essential to Coinbase's risk management and security protocols. You agree that Coinbase is under no obligation to disclose the details of its risk management and security procedures to you.

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.

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!

[KingsDen]

Not your key, Not your coin. They can freeze your fund anytime without your permission.

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!

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?