What could make an exchange to seize users assets

[o_e_l_e_o]

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?

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.

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?

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.

[1714995041]

1714995041

[1714995041]

1714995041

[1714995041]

1714995041

[1714995041]

1714995041

[Who is John Galt?]

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?

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.

[KingsDen]

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?

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.

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.

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.

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.

[Who is John Galt?]

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.

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.

[Synchronice]

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?

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.

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.

[o_e_l_e_o]

By the way, isn't it illegal to take away someone's money without his permission?

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.

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.

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.

[Synchronice]

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.

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.

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?

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.

[Who is John Galt?]

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?

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.

[o_e_l_e_o]

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?

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.

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.

That matches the data I shared in this post: https://bitcointalk.org/index.php?topic=5452900.msg62337285#msg62337285

[rat03gopoh]

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.

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.

[Alpha Marine]

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?

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.

By the way, isn't it illegal to take away someone's money without his permission?

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.

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