Crypto Exchanges Freeze Accounts for Weeks Over Anti-Money Laundering Reviews

The practice of freezing cryptocurrency accounts due to anti-money laundering reviews is becoming increasingly common. According to OKX co-founder Star Xu, deposits from addresses classified as risky can trigger stricter checks that may take up to 15 days or longer.

This review process involves analyzing the source of funds and wealth, with exchanges demanding proof of where the deposited coins came from. The distinction between these two terms determines which documents are required, with source of funds typically needing only a single payment trail, while source of wealth requires more extensive documentation, such as payslips or tax assessments.

Exchanges use analytics providers to screen incoming addresses against databases, flagging those that have touched sanctioned points. This can lead to bystanders being caught in the process, as seen with Kraken's recent case where 12,000 accounts were frozen due to a 'dust attack.'

During the review period, the balance is visible but out of reach, and exchanges may block withdrawals or trading. To navigate this phase, it's essential to respond quickly and provide evidence in legible documents.