As regulation issues around crypto still dangle, it is a difficult situation whenever banks freeze customers’ accounts for many reasons, especially if it has to do with crypto deals or accounts. Frozen crypto bank accounts are complex to solve not only in regular commercial banks but also in certain crypto-friendly banks too.
An example of a crypto-friendly bank where clients usually suffer frozen crypto bank accounts is Bitwala. It is a German-based startup remotely working in Berlin. Bitwala is often criticized on Reddit for account blocking.
It is understandable to an extent if regular commercial banks block accounts but then remains confusing as to why supposedly crypto-friendly institutions freeze customer accounts. However, lawyers have explained that in cases of frozen crypto bank accounts, no magic can help reactivate such an account.
The best advice for clients roped in these situations is to cooperate with their banks as much as they can. Frozen account owners could be made to carry out a know your customer (KYC) operation or perhaps to do Anti Money Laundry (AML) checks.
However, if cooperation doesn’t work, the best thing clients are advised to do is to get in touch with regulators with authority over such banks.
Clients rant on frozen crypto bank accounts
As the habit continues to be rampant among both traditional banks and crypto-friendly ones, it remains a surprise amidst the crypto community. Reportedly, operating in cryptocurrency and using a crypto-friendly bank or a traditional bank that is aware of its customers’ operations even put such client at a higher risk of getting his account frozen.
Just as mentioned earlier, about Reddit, a user complained about Bitwala on the platform. Pibyk, the user said on the platform that he happens to be a lucky customer who had his bank account blocked because he had no money in it when it was blocked. He said he got meaningless messages, and the banks’ customer service refused to respond to him on time.
However, not only Bitwala but also other banks are said to do similar things. Another crypto-friendly UK based bank Revolut has also been called out on Reddit for something similar.
Way out of the frozen crypto bank accounts mess
Legally, there are no charges that could be pressed against banks that freeze customers’ bank accounts.
James Kaufmann, a lawyer specializing in blockchain and cryptocurrency at Howard Kennedy, said that what can be done is specific to what has happened and where the bank is located. He, however, agrees that when banks block accounts, it is for AML/KYC checks. He says customers can achieve little or nothing by pressing charges to release funds entangled in frozen crypto bank accounts.
Featured Image by Pixabay