While crypto has always been scrutinized for potentially driving illicit transactions, the limelight has been intensified recently, especially on leading exchanges with accusations of being used by criminal and terrorist groups. Binance’s recent historic settlement with the US Department of Justice over criminal changes has come as a warning sign for all platforms. To stay in regulators’ good books, crypto exchanges are monitoring funds tied to illicit activities even more actively than ever.
This is why crypto hygiene has become more important than ever. Particularly in peer-to-peer (P2P) and over-the-counter (OTC) trading, the significance of this factor cannot be overstated. It’s a frequent yet underreported occurrence that crypto exchange platforms freeze client accounts due to suspected illicit activities or exposure to sanctions. While such measures are essential for maintaining the integrity and legality of trading platforms, they often catch users off guard, highlighting a gap in general awareness and understanding.
Due to the media almost always focusing on the sensational aspects of crypto, these concerns often receive less attention, and the users end up suffering the most. However, such outcomes can be easily avoided by maintaining the foundational practices of crypto hygiene in P2P and OTC transactions.
1/3 I feel the need to address our announcement yesterday regarding regarding the EU’s new crypto sanctions. We believe a crypto exchange should not have the power to unilaterally freeze an entire nation’s user accounts. And it must follow all sanction rules, old and new.
— CZ 🔶 BNB (@cz_binance) April 22, 2022
The Recent Case Considerations: AMLBot’s Insightful Intervention
Centralized exchanges and custodian wallets have a key responsibility to ensure strict regulatory adherence. So, it’s not uncommon for them to take overreaching actions when suspecting even the smallest of misconduct in a chain of transactions. A prime example of this can be drawn from a recent case handled by our AMLBot team.
In this case, a client engaged in a fiat-to-stablecoin exchange, converting USD 200k to USDT, encountered an unexpected hurdle when the exchange flagged his transactions as suspicious. The platform took prompt action to freeze his assets, based on a suspected connection to sanctions.
The client, seeking to prove his innocence and the legitimacy of his funds, turned to AMLBot for assistance. AMLBot’s investigation…
