My funds have been blocked

I didn’t do anything illegal, but my funds were blocked. What should I do?

All VASPs are required to comply with the terms and practices of the FATF, Travel Rule and AMDL6. Presumably, the terms of these documents were the reason for blocking the funds.

→ The exchange blocked my funds
→ My funds were blocked by a crypto exchanger
→ Is it possible to recover blocked funds?
→ How to reduce the Risk Score of your address

The exchange blocked my funds

Unfortunately, recently, exchanges have increasingly begun to block user funds. This is due to the Travel Rule and the conditions that FATF imposes on all VASPs.

In short, it is assumed that the composition of your funds at the address may not have been the most legal way. The point is not that you are a fraudster, but that your funds could include illegal funds received by some of your past counterparties.

Many currently illegal exchangers, mixers and exchanges were also sanctioned in 2023. If your address received funds from currently sanctioned entities, this could be the reason why your funds were blocked by the exchange.

In practice, we advise you to contact the exchange support, they always respond, although it may take a lot of time. You need to know the reason for the blocking, and if the reasons indicate that your address falls under the Travel Rule, AMDL6, AML/CTF, then you need:

1

ask for a list of all addresses, which in their opinion influenced the formation of your funds on the address;

2

provide information about the amount of illegal funds, as a consequence of which the exchange decided to block you;

3

contact us or fill out a form describing your situation.

In case their evidence of your guilt is not sufficient, you have the right to appeal to law enforcement authorities by submitting a report generated by AML Crypto. This report will include all data that can prove that you are not involved in illegal funds on the address.

My funds were blocked by a crypto exchanger

Exchangers often block users' funds. The first reason for this is that for exchangers this is part of their earnings.

Our company has conducted a survey of exchangers on the use of various address verification tools. According to the results of the survey, it was found that about 40% of all exchangers from bestchange.ru use a verification tool from a risk score contractor.

Out of 40% of exchangers, only half of them indicate which specific contractor they use, the rest conceal this information, but specify that they work in accordance with AML/CFT rules. Thus, some exchangers verify cryptocurrency addresses, but do not say with what tool. This may be due to security, or it may be due to additional earnings, as it is not possible to check the validity of the Risk Score that the exchanger has provided to your address.

Unfortunately, unblocking funds if they are blocked by an exchanger is less likely to happen than with an exchange. Exchangers often set the most favorable conditions for themselves in their privacy policies. From our experience with exchangers, we can say that only the largest and most popular exchangers can meet the requirements and facilitate unblocking.

Is it possible to recover blocked funds?

The short answer is yes, it is possible, but with nuances.

In cases where the blocking of funds occurred on the basis of an increased Risk Score, there is a chance of recovery. It is also worth considering the grounds on which the blocking occurred. There are more than 50 risks on the basis of which your address may have been blocked. The degree of risk varies depending on the composition of the risky assets.

EXAMPLE

If 100% of your funds are in the "Sanctions" or "Terrorist Financing" risk category, then unblocking of the funds is not possible.

In cases where a small portion of your funds are in the "Gambling" or "Mixer" risk category and you have not used either, there is a high probability that the funds will be unblocked if evidence of your non-involvement is provided.

As for the probability of unblocking, it should be noted that it depends on a number of reasons. And the more serious the reasons for blocking, the less chance of funds recovery.

How to reduce the Risk Score of your address

For example, you checked your address on Risk Score and got 65%. Now what?

While this Risk Score is acceptable to most contractors, VASPs may have a different opinion. Some exchanges indicate that they do not accept funds from addresses with a Risk Score above 50%. The question that immediately comes to mind is: How can I reduce my Risk Score?

The answer is that there are ways to reduce Risk Score, but it is important to realize that reducing your Risk Score is possible only by a few points and only if your address has not received an inflated Risk Score based on such risks as "Terrorism Financing", "Child abuse", "Sanctions", etc.

Let’s model the situations in which it is possible to reduce Risk Score:

Ratio of "dirty" to "clean"
The composition of the dirty means at your address is an insignificant part of it
1
Risk category
Dirty funds are not categorized as high-risk funds
2
Address status
The address has a long life, i.e. it has a lot of clean transactions, large sums of money
3
Anonymity level
Your address does not yet have social information about itself. In this case, by adding information about the address owner with proof, you can expect to reduce the Risk Score by a few percent
4

IMPORTANT! If your address is in the red risk zone (70% and above), it is almost impossible to reduce the Risk Score.

To check the Risk Score of your address, we recommend using the Btrace tool. There you can get a PDF report of your risk score. Regularly check your counterparties for risks in order to keep your funds intact.

Check blockchain address using Btrace

In seconds, determine the risk level of the counterparty’s address, find out the source of his funds and make an informed decision about interacting with him.

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