Centralized services form the basis of the global crypto market. According to CoinMarketCap, at the beginning of February, the daily trading volume on centralized crypto exchanges (CEX) exceeds $268 billion, and this is only in the spot market.. At the same time, the daily trading volume on decentralized exchanges (DEX), according to DefiLlama, is $2.9 billion.
Although many community members believe that cryptocurrencies should not be subject to the rules of the traditional financial system, CEX establishes certain rules of operation, the violation of which can threaten account blocking.
The problem is that sometimes users break the rules unintentionally, becoming a victim of circumstances.. Such situations are becoming more frequent due to the problems of large participants in the crypto market.. Recently, the US Department of Justice arrested the co-founder of the Bitzlato exchanger Anatoly Legodymov. Regulators have also suggested that the site is associated with obtaining assets from the darknet market.
The event, at first glance, not very unique and shocking for experienced participants in the industry, nevertheless launched a chain of events, the victims of which were ordinary users of cryptocurrencies.
Interlocks and regulation
Since Bitzlato did not conduct full client verification (KYC), then, according to a statement from law enforcement officers, various darknet representatives were among the clients of the exchanger, including Hydra, which was closed last year by the German authorities.
Shortly after the arrest of the co-founder of Bitzlato, another US regulator announced that the Binance crypto exchange is one of the three largest counterparties of the exchange for BTC transactions.. Over the past four years, Binance has processed $346 million worth of transactions through Bitzlato.
Although the platform claims to carefully monitor suspicious transactions, which sometimes leads to unreasonable blocking of accounts, from which the use of cryptomixers helps to escape, the coins suspected of money laundering from Bitzlato bypassed the exchange's filters.
At the end of January, a chat appeared in Telegram, the participants of which complained about “mass blocking” of accounts of Russian-speaking users on the Binance exchange. Chat participants linked the situation to the Bitzlato case, and a representative of the exchange confirmed in the chat that the blockages were indeed caused by problems with the exchanger.
Despite the fact that the user himself may never have had any connection with the exchanger or be unaware of the dubious status of the P2P counterparty at the time of the transaction, his account could still be blocked due to the formality of the verification procedures on large platforms. According to analysts, the exchange could block transactions if at least 20% of the funds in the wallet of the user's counterparty passed through Bitzlato.
According to Binance, access to the majority of blocked accounts has been restored. However, any blocking is a potentially lost benefit and stress associated with a possible loss of access to assets.. It is not worth hoping for a softening of KYC rules and checks – judging by the mood of world regulators, the authorities will continue to try to take control of the crypto market more and more. For example, the other day, the UK unveiled a plan to regulate cryptocurrency trading, and other world jurisdictions are taking similar measures.
How to avoid blocking
As the experience of users of large platforms in the latest blocking situation shows, it is possible to lose access to assets even if the user himself did not participate in illegal activities, but, for example, bought “dirty” coins via P2P. You can reduce the risk of blocking if:
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Follow the rules of the exchange and remember them. You have to pay for the convenience of using CEX by complying with the rules. Or switch to DEX.
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Check cryptocurrency through special services. If a transaction is suspicious, it makes sense to check its “purity” through analytical services. It's not free, but sometimes it helps to avoid serious problems in the future.
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Save correspondence with P2P counterparties. This will help to prove the fact of receiving coins and speed up account unlocking in the event of a dispute.
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Use coin mixing services. The choice of a mixer should be approached carefully, since most traditional services simply mix the coins of users involved in mixing, which increases the risk of obtaining coins involved in illegal operations. In addition, such transactions are identified by analytics services that can mark such addresses as high risk.
The bitcoin mixer Mixer.money offers users another mixing option – “Full Anonymity”, in which users receive cleared coins sent from major crypto exchanges. These coins are not tracked by the analytics software as having participated in the mix. The service introduced this mixing scheme in 2016 and has been running smoothly ever since.. Mixing can be done through the mixer website, TOR mirror or Telegram bot.
In addition to the full anonymity mode, users can use the classic mixing option or exact payment – making a transfer to a specific address through a mixer. Depending on the cleaning method chosen, mixing takes up to six hours, and the maximum service fee is up to 5% through the site and up to 4.5% through the bot + 0.0007 BTC.
The use of cryptomixers and compliance with other rules helps to minimize the risks of blocking accounts on large exchanges and maintain access to your assets.