I keep seeing reasons to stay away from centralized exchanges.

[Livingleged]

So this Binance user made a post on Reddit that his Binance account was randomly frozen for as long as 6 weeks after he made a last transaction of just $200. He claimed  that he has been using the Binance service for more than 6 years and never had such experience before.
In his word of regret after his experience he said;
“ I regret believing, don’t trust banks trust crypto”
“I should have used trust wallet instead of Binance”



This is just one of many reasons we discourage the Centralized exchanges even if his account will be unfreeze after they are done with their review, it must have put the user in an uncomfortable situation and there is no freedom here anymore.

I was also caught up by the statement he made which was he should have used trust wallet instead, I don’t think trust wallet wallet is also a safer zone, just because it’s a closed source wallet and it could also be compromised since one cannot review its source code only the team have access to it.

He should have opted for an open source non custodial wallet like sparrow or the Electrum wallet instead.

Link: https://www.reddit.com/r/binance/s/8uORW6zOwd

[Big Dirams]

Scenarios like this often happen alot when it comes to centralized system and people keep complaining of how their account will get frozen for no reason at all or any warning signs before frozen the account. Luckily I haven’t been a victim of situations like this but this type of situation often also occur with kucoin too because I have seen people complain a lot about kucoin frozen their account for no specific reason but seems they are doing some of this things for security purposes but at least warning should be issued before any restrictions.

The victim will be uncomfortable to be honest, who knowns what plans he had to settled but now no access and the plans would be shift to October. Sometimes situations like this don’t take up to months maybe in few weeks time he might gain access after the research are been completed.

[Hypnotizer]

I was also caught up by the statement he made which was he should have used trust wallet instead, I don’t think trust wallet wallet is also a safer zone, just because it’s a closed source wallet and it could also be compromised since one cannot review its source code only the team have access to it.

He should have opted for an open source non custodial wallet like sparrow or the Electrum wallet instead.

Seems like this particular user haven’t fully understood the risks that comes with closed sourced wallet especially Trust Wallet in particular, but to some extent he’s statement is justified because Trust Wallet can’t freeze his money if he used it for the transaction instead of Binance and that’s his point.

That’s why exchanges should be used for what they’re meant for which is to buy or sell rather than converting an exchange to a wallet where you keep your coins to avoid all these unforeseen circumstances and assuming the transaction is more than $200, imagine how he’ll react to the situation.

[Frankolala]

He said he regret believing "don't trust bank but trust crypto" how is that related to Binance freezing his account when Binance isn't crypto but a centralized exchange that's the same thing with a bank in the cryptospace. It shows the guy only have little knowledge on crypto and look at the wallet he chose again. He has made another mistake on his choice of wallet. Instead, of learning he will still put the blame of crypto again if he lose his funds for storing it in a closed source wallet like Trust wallet. Not your keys..Not your coins.

[Odohu]

Even though I love to hear both sided of the story on sensitive issues like this, I think that Binance went too extreme. The user might have received payment from platforms that are deemed forbidden by Binance,  or from wallets that have been marked as suspicious. Despite these reasons, the duration they have given to complete their investigation is too long and appear as if they want to seize the money. Such investigation is not supposed to take 6 weeks over mere suspicion because that is what it is even though they wrote their response as if they were sure there was violation.

[Yablee0]

That’s why exchanges should be used for what they’re meant for which is to buy or sell rather than converting an exchange to a wallet where you keep your coins to avoid all these unforeseen circumstances and assuming the transaction is more than $200, imagine how he’ll react to the situation.

Sometimes it good for things like this to happen so that people will learn. Because it seems like people don't listen to advice, they prefer learning the hard way before they can start doing the right thing.  However, storing fund's or assets on an exchange is not a good practice that has been warned against long before now and this is actually a old story. But I hate it seeing people doing the same thing all over again without thinking of the consequences involved, maybe I was right when I said that experience is just the best tutor many people understand.

[Doan9269]

Some are making use of centralized exchange without knowing the implication in using them, you don't have your privacy as well as the submission of your full control over your assets to those platforms, whereas these same exchanges apron to attack by being hacked or sometimes you may discover the went bankrupt and seize operations, tell me why then we someone have his assets on them and the little restrict you from claiming or making adoption on your account by the reason of their policy.

[ColdLava40]

In his word of regret after his experience he said;
“ I regret believing, don’t trust banks trust crypto”
“I should have used trust wallet instead of Binance”

Don't use centralized platforms to store your coins they are not wallets.

People make mistakes on their own and blame crypto for what it has no fault in.

You want to trade? Use an exchange. You want to store your coins, use a self custodian wallet. We often try to point fingers right after we have encountered a lot of issues. But what happens before that? We play blind eyes to things that gave red flags to our very own eyes.

Now he wants to use trust wallet, I'm wondering who he will blame next or what his next regrets would be. "Don't trust trust" lol

[promise444c5]

Even though I love to hear both sided of the story on sensitive issues like this, I think that Binance went too extreme.

What was extreme? The duration or the ban itself? The ban wasn’t, 6 weeks is still moderate(it’s likely an estimate your number on the queue of similar cases), I’ve seen and been through worse.

Some TOS rules can also affect them as an Cexchange, it’s normally  the right precaution they need to take to avoid getting involved with your mess.

If you don’t want that then don’t use exchange, but that doesn’t mean you can’t put others in same situation.

[Hyphen(-)]

This is a clear definition of Not your keys, not your coin.

Now this person want to use his crypto in the exchange, but the account has been freezes for investigation he know nothing about, he can’t have access to his money because they are not in his position to control, the exchange control his money even though he have login details he think will give him access to his money.

This can serve as an example to some people that argue about not having the control of their crypto in exchanges, because this is clear that he can’t access his money simply because the exchange that are supposed to grant the permission are not satisfied with some transactions going on in his account, while in a self custody wallet, you sign your transaction anytime you want.

[Shadiq]

It is not uncommon to encounter such an uncomfortable situation in any centralized service, because those who are controlling are humans and it is normal for humans to make mistakes and even machines can make mistakes sometimes. What kind of action is taken by that institution after such a mistake is the main thing. You have to be prepared for such a situation to use a centralized service, otherwise I think a decentralized service is better for you.

There may be a different reason for using a trust wallet, you may know that Electrum does not support crypto but only supports Bitcoin. That user may be talking about a trust wallet as a hot wallet and he can keep multiple cryptos.

I usually use exchanges, closed source and open source wallets. Each wallet is used for different purposes. Centralized exchanges for crypto exchanges, closed source wallets like trust wallets for general transactions and open source wallets for holdings. Basically, there is no big harm in using any service in the right way, as long as you are aware of the risks.

[Qhunman]

Sometimes it good for things like this to happen so that people will learn. Because it seems like people don't listen to advice, they prefer learning the hard way before they can start doing the right thing.  However, storing fund's or assets on an exchange is not a good practice that has been warned against long before now and this is actually a old story. But I hate it seeing people doing the same thing all over again without thinking of the consequences involved, maybe I was right when I said that experience is just the best tutor many people understand.

Maybe you aren't wrong because some people don't learn unless their experience it the hard way,no matter how much you warned them not to store their assets on a centralised exchange they will still take your piece of advice for granted. Anyone who doesn't take advise seriously is on his own and will take the blame upon himself alone,the only exception is maybe in a situation where you don't know that keeping your assets on a centralised exchange isn't safe but if you know yet you still go ahead and hold your assets on a centralised exchange, you will only have yourself to be blamed if things go south.

[Mayor of ogba]

Even though I love to hear both sided of the story on sensitive issues like this, I think that Binance went too extreme. The user might have received payment from platforms that are deemed forbidden by Binance,  or from wallets that have been marked as suspicious. Despite these reasons, the duration they have given to complete their investigation is too long and appear as if they want to seize the money. Such investigation is not supposed to take 6 weeks over mere suspicion because that is what it is even though they wrote their response as if they were sure there was violation.

There are people who want to use crypto for money laundering which is why government regulate centralized exchange by asking them to implement Anti money laundering (AML) and know your customer (KYC) in order for them to fight money laundering, and any exchange that fails to implement AML and KYC will be shutdown and penalize. If Binance suspected one of their users received funds from a wallet that goes against their terms and conditions they have the right to freeze the user account and take enough time to investigate the payment to know if the funds is a clear funds or not, and before you say Binance went too extreme try and read the terms and conditions of Binance to know what they say about receiving funds from a wallet that goes against their terms and conditions and the time it will take for them to investigate payment from such a wallet.

[New Judgement]

What you are telling us is that, even if someone misuses the centralized exchange, the operators of the exchange should turn blind eyes and do nothing, simply because they want people to use the exchange? My candid advice is don’t use a one sided explanation to rule a case. Have you asked the user what he did that got his account frozen? Why do people always think they can do whatever they like in crypto and get away with it? Cex should stop taking all the blame’s any time they freeze some accounts.

[pooya87]

Centralized exchanges have always been bad. They have always been regularly hacked, sometimes the exchange owners scammed people and ran away, etc. And these days with increasing amount of regulations (read restrictions enforced by governments seeking control and surveillance) things are getting worse with CEXes as they start freezing people's accounts more regularly with fake reason such as taint!

Unfortunately it is not possible to "stay away" from them since DEX is not as grown and as easy-to-use as CEX yet (best option is still Bisq) so at the very least people should know the risks before going in and always use an amount in a CEX that they can afford to lose.

[PostQuantumBTC]

Sometimes it good for things like this to happen so that people will learn. Because it seems like people don't listen to advice, they prefer learning the hard way before they can start doing the right thing.  However, storing fund's or assets on an exchange is not a good practice that has been warned against long before now and this is actually a old story. But I hate it seeing people doing the same thing all over again without thinking of the consequences involved, maybe I was right when I said that experience is just the best tutor many people understand.

This is not about storing coins on an exchange, it is about sending coins on exchanges. I think it is better people start withdrawing coins on exchanges to their noncustodial wallet first before sending the coin to their destination. Yes, to store coin on an exchange or on exchanges is very bad but some people are traders and they may have the money on the exchange at the time. But it is better they send the coin to their wallet first.

[Felicity_Tide]

~snip

This is just one of many reasons we discourage the Centralized exchanges even if his account will be unfreeze after they are done with their review, it must have put the user in an uncomfortable situation and there is no freedom here anymore.

I think this particular case goes a bit beyond why we've always discourage the use of Cex for storing Bitcoin in the long term, although it still falls under the issue of financial inconvenience. Binance claimed to have carried out their action against the account because the account had a transaction with a specific address outside of their ToS, which is likely to have been an already flagged address. I think this protocol would also affect anyone who chooses to use it for trading and P2P only.

But again, the inconvenience is the most disgusting part of actions like this, especially when you genuinely don't know anything about what was stated in their reasons that resulted to the freezing of account.

[Dr.Bitcoin_Strange]

Based on the message from binance, they said he violated one of their terms by transacting with addressed that is not allowed according to their policy. Is that not what centralized platforms are all about? They are all about rules and when they noticed that someone has gone against their rules, they lock the person's funds. Not your key, not your coins. Even if you want to transact on any exchange, learn not to save your money in there.

The last time I had this similar issue on that exchange, I received payment directly from a mixer and that lead to my account being almost locked if not that I saw their message early enough and I responded to it before the deadline that they gave. One important thing I'd like to mention is that, always read every notification you get on the exchange you are using, sometimes when the exchange detects any suspicious transaction like that, they will first contact you before taking any other action, that was what happened in my case.

[Son Of Blockchain (SOB)]

He said he regret believing "don't trust bank but trust crypto" how is that related to Binance freezing his account when Binance isn't crypto but a centralized exchange that's the same thing with a bank in the cryptospace. It shows the guy only have little knowledge on crypto and look at the wallet he chose again. He has made another mistake on his choice of wallet. Instead, of learning he will still put the blame of crypto again if he lose his funds for storing it in a closed source wallet like Trust wallet. Not your keys..Not your coins.

It's obvious he has no knowledge of Bitcoin or crypto if he does he would gone for a wallet that would give him self custody but he choose to store his coin in a wallet controlled by a third-party and ended up restricted for his mistake. That dude still have a long way to go and need to learn about wallet security.
 Binance and trustwallet are owned by same person, Trust Wallet might be non custodial but the fact that it's closed source is something someone who understand wallet security would be careful with so it’s true he has no knowledge of Bitcoin/Crypto.

[Nightwatchmare]

Even if centralized exchange is not good enough in storing assets, the guy that Binance freezed his account due to his interaction with address that is against their policy, is not a good reason for him to regret believing, do not trust bank trust crypto because it is crypto that freezed his account it is Binance and even a bank can do the same thing Binance did, if they notice sudden large amount of money in someone's account. The guy should have escaped this if he had used self-custody wallet but now that he has learn the hard way he will start using self-custody wallet.