Crypto Exchange Account Frozen: Why Nobody Tells You Why, and What Actually Helps

The information provided in this article is for informational purposes only and does not constitute financial advice. Investing in cryptocurrencies carries a high level of risk.

The withdrawal is stuck, the account is frozen, and support keeps answering in building blocks: "A review is under way, we are not permitted to give further details." It looks like evasion. It is precisely what the law requires.

Anyone who receives no explanation after a freeze is not facing arbitrary treatment. They are facing Section 47 of the German Money Laundering Act, the GwG. That provision expressly prohibits the provider from telling you about a suspicious activity report it intends to file or has already filed, and equally about any investigation that follows from it. Once you know this, you stop asking the wrong question and start asking the right one.

Account frozen: the key points

• Under Section 47 GwG the provider must not inform you about a suspicious activity report. The silence is a legal duty, not bad service.
• Under Section 46 GwG a reported transaction may be executed at the earliest once the consent of the Financial Intelligence Unit or of the public prosecutor has been passed to the provider, or once the third business day after the day the report was sent has elapsed without the transaction being prohibited.
• For this deadline, Saturday does not count as a business day (Section 46 (1) sentence 2 GwG).
• Crypto providers licensed in the EU are obliged entities under Section 2 (1) no. 2 GwG. The reporting duty and the ban on tipping off apply to them just as they do to banks. The report goes to the Financial Intelligence Unit, the FIU, and not to BaFin.
• A second reporting duty has to be kept apart from this one, and the two are often confused. Since December 30, 2024, providers have had to report suspected market abuse to BaFin under Article 92 MiCAR. That has nothing to do with money laundering, and nothing to do with your freeze.
• Nothing works as well as an unbroken record of where the funds came from. A letter of complaint achieves far less.
• A freeze has to stay proportionate. If it drags on for months with no discernible reason, the route via a BaFin complaint and legal representation is open.

Account frozen: what actually runs in the background

In Germany, crypto service providers are obliged entities under anti-money-laundering law by virtue of Section 2 (1) no. 2 GwG. It is the same category of duties that applies to banks, merely a separate number in the statute. If a transaction gives rise to reasonable suspicion, the provider is not merely entitled but obliged to file a report with the Financial Intelligence Unit, and to halt the transaction for the time being.

… Continue reading the full article at the original source below.