Blocking of crypto assets
Crypto assets may be blocked for various reasons, including KYC/AML/KYT checks, suspicious or unusual activity, the history of previous transactions, violations of platform rules, sanctions-related restrictions, a request from law enforcement authorities, or a court-ordered seizure.
In practice, the problem often starts with a single message: “Your assets have been temporarily blocked.” Yet the same wording can describe completely different situations.
Therefore, the first question is not how to unblock the cryptocurrency, but what exactly has been blocked, who blocked it, and on what grounds.
Grounds for blocking
Cryptocurrency exchanges and other platforms use various procedures to verify clients, operations, and transactions.
KYC concerns the identification and verification of the client. AML/CFT covers a broader range of measures aimed at managing the risks of money laundering and terrorist financing. KYT is used to analyze specific transactions and blockchain addresses.
At the same time, a platform may assess more than just the user’s latest transaction. The asset’s previous transaction history, interactions with other addresses, the nature, volume and frequency of transactions, P2P transactions, sanctions-related risks, and other factors may also be relevant.
For example, a user may receive cryptocurrency from an ordinary counterparty without taking any obviously risky actions. However, the asset may have previously passed through several other addresses. If one of them is classified as high-risk by the compliance system, this may trigger an additional review.
It is important to understand that a high AML/KYT risk score does not in itself establish that cryptocurrency was obtained illegally. It is a risk assessment that may trigger further review.
The results produced by different analytical services may also vary. Therefore, a positive result from one KYT check does not automatically guarantee that a particular platform will consider the asset low-risk.
In more complex cases, blockchain tracing may be used – a more detailed analysis of the asset’s movement across the blockchain. It helps reconstruct transaction history, identify related addresses, and understand where a particular risk signal originated.
Exchange blocking and asset seizure are not the same thing
This is one of the most important distinctions.
If an exchange independently restricts transactions as part of an AML/compliance review, the issue primarily concerns the relationship between the user and the platform. The platform may ask the user to verify their identity, the source of funds, the nature of the transactions, or provide other documents.
A different situation arises when the platform reports that the restriction is connected to a request from a law enforcement authority. In that case, it is necessary to establish which authority made the request, which proceedings it relates to, which assets or transactions are of interest, and what exactly was requested from the platform.
Another possibility is the seizure of assets in criminal proceedings. This is a procedural measure imposed by a court in accordance with criminal procedure law.
The Criminal Procedure Code of Ukraine expressly provides for the possibility of seizing virtual assets. Court practice also shows that such seizure may concern not only the assets themselves but also transactions involving them on a centralized platform, including a prohibition on using or disposing of the assets and blocking the functionality of the relevant account.
Therefore, an exchange’s internal blocking and a court-ordered seizure are different mechanisms, even if they may look the same to the user: they simply cannot access or dispose of their assets.
What to do after your crypto assets are blocked?
First of all, do not rush to provide explanations or send the platform every document you have.
The first step is to document the blocking itself: save the exchange’s messages, correspondence with support or compliance, screenshots, transaction history, and any other information that may disappear or become inaccessible after the account is restricted.
You should then establish:
- what exactly has been blocked: the account, an asset, a transaction, or the ability to withdraw funds
- when the restriction arose
- what reason the platform gives
- what documents or explanations are requested
- what the platform relies on: its internal rules, an AML review, sanctions, or a request from a law enforcement authority?
Check the platform’s rules
The Terms of Use and other rules of the particular exchange are important.
It is necessary to establish which legal entity the agreement was concluded with, which law applies, what appeal procedure is available, and under what circumstances the platform may restrict transactions or request additional documents.
This is particularly important for international platforms: the brand name does not always correspond to the legal entity that is actually a party to the user’s agreement.
Reconstruct the asset’s history
If the issue concerns the origin of cryptocurrency, the specific transaction should be examined rather than explained only in general terms.
Depending on the circumstances, this may include:
- transaction data: TXID, sender and recipient addresses, and the asset’s transaction history
- information about P2P transactions: counterparty details, correspondence, and profiles
- documents confirming the origin of the asset: proof of purchase or receipt, bank receipts
- KYT or blockchain analysis results.
The origin of an asset is often established not by a single document, but by a combination of data that allows its movement to be reconstructed step by step.
Respond appropriately
If an exchange asks you to confirm the origin of your assets, provide relevant documents and explanations and, where necessary, separately explain particular transactions.
At the same time, there is no universal rule requiring a user to automatically provide the platform with every personal, financial, or tax document in their possession. First, it is important to understand exactly what is being requested and why.
It is also important not to invent a more convenient version of the source of funds. Providing false information may only make the situation more difficult.
Blocking at the request of law enforcement authorities
The approach here should be different.
A notification that the blocking is connected to a request from law enforcement does not, by itself, answer all the important questions.
First, it is necessary to establish which authority contacted the platform and which jurisdiction it belongs to, the number and date of commencement of the criminal proceedings, their legal classification, which assets or transactions are of interest, what exactly was requested from the platform, whether there is a court order for the seizure of the assets, and what procedural status the owner of the cryptocurrency has.
In such a situation, lawyer’s requests, communication with the platform, and other legal tools may be used to obtain additional information and establish the circumstances of the blocking.
However, it is important to understand that a lawyer’s request is not, in itself, a means of automatically unblocking the assets. Its primary purpose is to obtain information needed to determine the appropriate next steps.
Particular caution should be exercised when providing explanations if it turns out that the blocking is connected to criminal proceedings. In such a case, a response to the platform may be relevant not only to the AML review but also to the assessment of the asset owner’s actions.
What to do if crypto assets have been seized?
If the restriction is specifically related to the seizure of assets in criminal proceedings, the procedure for imposing and challenging it is governed by the Criminal Procedure Code of Ukraine.
Asset seizure is a temporary deprivation, by an order of an investigating judge or court, of the right to dispose of and/or use property in the cases provided for by criminal procedure law. One of the purposes of such seizure may be the preservation of physical evidence.
At the same time, the owner or possessor of the property has procedural mechanisms available to protect their rights.
In particular, Article 174 of the Criminal Procedure Code of Ukraine provides for the possibility of applying to the court for the full or partial cancellation of the seizure if the need for the measure has subsequently ceased or the seizure was unjustified.
Exchange account data, wallet addresses, transaction history, and documents confirming the acquisition of the assets may be important in establishing that particular assets belong to a specific person.
Court decisions involving the seizure of virtual assets held in Binance accounts are particularly illustrative. In some cases, courts have expressly prohibited the use and disposal of the assets and ordered the functionality of the relevant account to be blocked.
However, the practice is not limited to prohibiting the use of assets. In one case, for example, the court also considered the transfer of seized virtual assets to ARMA for management.
Therefore, if assets have been seized in criminal proceedings, simply contacting the exchange’s support service is no longer the primary way to resolve the issue. It is necessary to address the legal grounds underlying the restriction.
What you should keep in mind?
Blocking cryptocurrency does not, by itself, mean that its owner has committed an offense.
A platform may suspend a transaction for additional verification. A risk signal may be related to the asset’s previous transaction history. The reason may be the platform’s internal rules or sanctions-related restrictions. A different situation arises when assets are blocked in connection with criminal proceedings and a court-ordered seizure.
Therefore, after your assets are blocked, you should not act on the principle: “I’ll send the exchange everything I have and wait.”
First, establish: what exactly has been blocked → who imposed the restriction → why → which assets and transactions it covers → what documents support this → whether there is any law enforcement or court involvement.
Only then should you determine the next steps.
In Ukraine, the possibility of seizing virtual assets is expressly provided for by criminal procedure law, although the Law of Ukraine “On Virtual Assets” has still not entered into force as of 2026. Therefore, each situation should be assessed based on the applicable law, the platform’s status, its jurisdiction, and the specific circumstances of the blocking.