There is a not-so-old saying in the crypto world that goes "not your keys, not your coins." After all, the freedom that bitcoin provides depends on that very thing: self-custody and self-control of one's money.
We have seen hundreds of stories of hacks and funds being lost. Having your money on exchanges, while it makes moving funds easy, puts you at risk
This is precisely the price that some Colombian Binance users are paying. About 20 users received a blocking message for their account from the famous exchange last September. More than four months later, they still have not received a response.
More than four months later, more than 100 people have reported having their funds blocked.
This month, things worsened when Binance debited their funds from their accounts.
Binance Colombia, Blocks, and Dutch Law Enforcement
About 20 Colombian users (now around 100) are affected by this strange case. Some of them reported having their life savings in the exchange. Others conducted all their commercial activity through Binance-provided addresses. Some accounts exceeded the value of 1 bitcoin.
Seemingly out of the blue, they received a message from Binance thanking them for using the platform. They were also warned that their accounts were under review. But under review by whom? Well, according to the exchange, Dutch law enforcement authorities were investigating those accounts.
They also urged users to contact the officer in charge of the investigation if they wanted more information.
A Strange Case: Contradictions and Lots of Doubts
The details of this case are very strange. Binance customer support said that it was a risk control procedure. Each individual case, they said, is different and thus must be reviewed on its own merits.
A few customers were asked to verify their Colombian identity and income. However, problems still persist even after the verification process took place.
Some have been told that their funds are blocked due to a Dutch police investigation. Others were informed that they’re being investigated by the U.S. Drug Enforcement Administration (DEA).
Then in a strange turn of events, some were told of an investigation by the HIDTA Front Range Task Force in Denver, a division of the Bureau of Alcohol, Tobacco, Firearms, and Explosives. This is thought to have something to do with blacklisted wallets. However, no additional information has been released by either Binance or any law enforcement agency.
Many of those impacted have contacted various lawyers to file joint legal actions. In the meantime, to make matters worse, the blocked funds started to disappear from the balances.
Can Users Sue Binance
One of the most prominent cases is that of Jairo Andrés Vélazquez. Jairo was one of the first to report that something had gone astray at Binance. At the time that his account was blocked in October, he had a net worth of 1.88 BTC, almost all of it in Tether (USDT).
This January, everything changed. He logged into his account and noticed something strange. The balance was just a few sats - only around $14 were left.
This is how the whole legal tangle started for in theory, Binance is technically not authorized to block its Colombian users due to an order from a foreign authority. However, Binance is relying on its terms of use and conditions to do so, stating its intentions to make these investigations as smooth as possible.
Yet, that perceived smoothness is nowhere to be found as Binance has still yet to clarify why some accounts are empty. Likewise, the exchange has refused to provide results of investigations where it finds such users guilty of wrongdoing.
What Might Have Happened: An Explanation
While things don't look good for Binance, it’s important at how the vast majority of affected users have used Binance's own person-to-person (P2P) marketplace.
Let's say some of these users received money from a compromised address. This makes that user's account subject to a potential investigation — even if the user was unaware that they had received compromised money. Whenever this occurs, Binance immediately puts its anti-money laundering department to work.
The chances of someone trying to launder money in the Binance P2P marketplace are quite high. Therefore, hundreds of users are affected by crimes of which they are often unaware.
In the end, this is a terrible case in which there seems to be no winner. If the investigations are positive, users lose all their money. If they are inconclusive, the platform will have to further regulate the P2P markets. Only time will tell. Hopefully, there will be a positive resolution to the case in the not-so-distant future.
