I received my first report from ZondaCrypto clients about 3-4 years ago. They concerned situations similar to the current ones: refusal to pay out funds accumulated on the exchange to Zonda clients under the pretext of „the necessity to conduct AML verification.” Zonda withheld the payout of funds, demanding the submission of documents intended to „document the origin of funds.” The documents were never satisfactory. This could go on for months. Similar to what Szymon Jadczak described.
In all cases, after sending a resignation from using the exchange’s services and sending a stern lawyer’s letter demanding the payout of funds, pointing out that their practices are unlawful and that this would be reported to GIIF, the crypto assets and FIAT funds were eventually paid out.
The refusal to execute a transaction by an obligated institution under the pretext of „AML verification to check whether the accumulated funds are legal” has no legal basis.
First of all, such „AML verification” should be carried out earlier (e.g., when the client opens an account, when the first funds arrive at the exchange), and not when the client wants to withdraw funds.
Secondly, an exchange or bank, if it has doubts about the legality of funds or a transaction, has no right to block them on its own and deliberate over receipts for weeks. Instead, it is obligated to immediately send a report to GIIF, and it is this authority, or rather the prosecutor informed by GIIF, who decides whether a given transaction (or funds in a given account) should be blocked. It is always and exclusively the prosecutor’s decision.
Looking at the matter from a different perspective, anyone who knows the inner workings of cryptocurrency exchanges knows that, in greatly simplified terms, their business consists of executing exchange transactions: crypto-to-crypto or crypto-to-fiat in the format exchange–exchange user or user–user. Exchange users open an account for this purpose and have their individual account/wallet. In theory, a user makes an exchange on the platform and withdraws their funds to their private account or cold wallet.
In theory…
In practice, clients leave these funds on the exchanges: because it is more convenient, because they are about to open new positions, because they are busy… These can amount to enormous sums „lying idle” in exchange users’ accounts, which the people managing the exchange can see in their operating systems and to which they have access…
This may, moreover, constitute a separate legal problem, because „intermediation in cryptocurrency exchange” and „accepting deposits” or the service of „storing crypto assets” are distinct activities with different regulatory statuses and requiring separate authorization/licensing.
So, what do you think – do exchanges use these „idle” client funds or not? I don’t know. I don’t know how it is or was at ZondaCrypto, but intuition and knowledge of human nature tell me that it is very likely.
Ultimately, however, this is not a problem of ZondaCrypto, the crypto asset industry, or financial services. It is the problem of a helpless state and its opportunistic officials and legislators, who have known since the collapse of Bitmarket (2019, losses of PLN 100 million) that this market needs to be regulated, but who chose, of course, their favorite strategy: let’s bury our heads in the sand and wait it out. Why touch difficult topics.
In the end, ordinary citizens will pay the bill anyway, and we will blame our political opponents.
Paweł Osiński
Attorney-at-law, expert in crypto assets, money laundering, and cybercrime