Binance suspends $1 million corporate account on regulator’s request

• The crypto exchange revealed its action shortly after the account owner claimed they didn’t know why they couldn’t access their account.
• Binance didn’t disclose the name of the law enforcement agency.

Popular crypto exchange, Binance, has confirmed that it froze the account of a Tezos tool contributor with $1 million worth of crypto held. The Tezos tool contributor called out Binance on social media claiming ignorance on why their account was frozen. On Thursday, the leading exchange released a Twitter thread confirming a restriction on the account of BakingBad (a Tezos staking rewards auditor) because of a request from a financial watchdog.

In the thread, Binance also denied the allegation from BakingBad as to why it restricted the account. The Tezos contributor claimed that it couldn’t access its corporate account since July 1, 2022, and Binance didn’t give any reasons for the account’s shutdown. BakingBad stated that the account contained various tokens such as Bitcoin (BTC), Tether (USDT), Ether (ETH), and Polygon (MATIC).

Binance added that it provided the Tezos contributor an LE contact via the platform’s chat system on July 5, 12, and 22, 2022. Hence, BakingBad cannot deny not knowing about Binance’s actions. The exchange further said it is unfortunate that BakingBad is attempting to mislead the community. But that won’t change anything about the case.

The account in question was restricted as the result of a law enforcement request, which @TezosBakingBad is well aware of, as he was already advised of this multiple times and provided the LE contact form through our support chat system on 7/6, 7/12, and 7/22.

— Binance (@binance) August 25, 2022

Binance explained that it is obligated to cooperate with requests from law enforcement agents like any other exchange. The exchange advised BakingBad to follow the process of contesting the account seizure with the agency. However, it clarified that Binance has no control over that process as it is the agency’s exclusive right.

Binance fails to reveal the agency’s name

Since Binance and its subsidiaries have offices in several nations globally, it is unclear which law enforcement agency made the request from Binance. According to BakingBad’s LinkedIn page, the company is based in Estonia. Estonia’s financial regulators started asking virtual asset providers in the country to comply with new anti-money laundering regulations in February this year.

It is important to note that Binance has been complying with several law enforcement agencies and regulators that imposed sanctions on Russia-related businesses and persons after the country invaded Ukraine. In February, a Binance spokesperson said that the exchange wouldn’t just freeze the accounts of millions of its users for no reason.

The company’s CEO, CZ, said the exchange and traditional financial institutions must adhere to sanctions in a similar manner. Four months ago, Binance froze the accounts of Russians within and outside the country. Since then, they haven’t been able to trade or deposit with their Binance accounts or use the platform’s features, such as custody wallets, staked, or earned deposits. Binance’s actions are understandable, given its intent to run a global business. If the exchange doesn’t comply with regulatory policies in any region, it will be almost impossible to expand as intensively as it desires.