April 2, 2023

Prominent cryptocurrency exchange Binance has now confirmed it has restricted its account Earn $1 million in cryptocurrency for Tezos tools contributors. The confirmation came after the platform was called out on social media.

In a series of tweets, the cryptocurrency exchange mentioned that it restricted the account of Tezos staking rewards auditor Baking Bad, citing the reason as “the result of a law enforcement request.” The cryptocurrency exchange made these statements following allegations that it froze and wiped the account “without any explanation.”

Baking Bad, a Tezos contributor, claims the exchange has blocked access to its corporate account, which contains Bitcoin, Ethereum, Polygon and Tether, among other tokens, since early July.

Binance denied this claim. The allegations by the Tezos contributor were made on Twitter on August 25.

The platform said,

BakingBad knows [Binance’s actions], as he has been told this many times and provided the LE contact form via our support chat system on July 6th, July 12th and July 22nd. Unfortunately, trying to mislead the community on your case won’t change anything.

It further added,

Like any other exchange, Binance needs to cooperate with such requests. If you wish to go this route, there is a process for contesting a seizure with the agency. But this is done through the agency, and Binance has zero control over the process.

Ambiguity around law enforcement agencies

Less clear is what the law enforcement agency cryptocurrency exchanges are talking about.

This is because as the platform’s subsidiaries operate in various countries around the world, there is no way to direct specific law enforcement agencies.

The origins of Baking Bad can be traced back to Estonia. Many companies from the crypto industry have been operating out of Estonia.

Baking Bad mentioned that several requests were made through the DoJ (Department of Justice). It also mentioned that upon inquiry, the DOJ should provide information within 20 days.

However, the company said they have yet to obtain information on the issue and it has been more than two months.

Baking Bad also said it passed Binance’s Know Your Customer Policy (KYC) for businesses on April 25.

Even after meeting the KYC requirements, Binance still did not send the letter to Baking Bad’s corporate address. The exchange side lacks physical objects and emails, but they have completely frozen the funds of the accounts.

Binance has always complied with law enforcement agencies and authorities

Binance remains very compliant and cooperative with other law enforcement agencies and regulators. Law enforcement agencies have previously imposed sanctions on Russian entities and individuals, especially at the start of the war in Ukraine.

Earlier this year in April, Binance restricted the accounts of Russian nationals and residents. Users cannot deposit or trade Binance’s spot, futures, and custodial wallets, which also include stakes and earned deposits.

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