QuadrigaCX: How to avoid confiscation of crypto assets
Checking a crypto wallet for suspicious transactions is a key step in protecting against potential account blocks, regulatory sanctions, and reputational risks. In this article, we will break down the main methods and analysis tools that will help minimize risks associated with using crypto assets.
Why is it important to check crypto wallets?
Modern regulators, such as the FATF and Canadian authorities, are tightening measures to combat money laundering and terrorist financing. For example, in the QuadrigaCX case, British Columbia authorities applied an Unexplained Wealth Order (UWO) in an attempt to seize cash, gold bars, watches, and jewelry, the origin of which they claimed was undocumented. This created a dangerous precedent for cryptocurrency asset owners who cannot prove the legality of their origin.
Risks associated with non-transparent cryptocurrencies:
- Account blocking on exchanges with KYC/AML procedures
- Being blacklisted if the wallet interacts with addresses associated with hacker attacks, mixers, or "tainted" crypto
- Legal consequences, such as civil asset forfeiture
How to check a wallet: Key methods
1. Use blockchain explorers
Etherscan, BscScan, and similar tools allow you to obtain basic information about a wallet:
- Transaction history: who sent and received funds?
- Activity assessment: regular small transfers or sharp spikes can be signs of suspicious operations
Example: If a wallet has interacted with addresses that were previously flagged as sanctioned or participated in suspicious transfers, this signals a high level of risk.
2. AML screening and address link analysis
For deep verification, use professional tools such as Chainalysis, TRM Labs, and Elliptic. They provide detailed information on "sanction tags," connections to mixers, or hacker funds.
What exactly to check:
- Address connections: Use services like Nansen or Crystal Blockchain to determine if the address has interacted with illegal sources
- Risk profile: Evaluate the address's risk level based on its activity data
3. Document the source of funds
To protect against accusations of using "dirty" crypto, it is important to record:
- Sources of incoming funds
- Contracts, invoices, and other documents confirming their legality
How to protect yourself: Practical recommendations
1. Check the address before transferring
Before every large transaction, be sure to conduct a preliminary AML screening. This will protect you from accidental interaction with suspicious addresses.
2. Use of custodial services
For storing large assets, use custodial platforms with transparent KYC/AML procedures. This minimizes the risk of funds being blocked.
3. Timely legal assistance
If you receive a notice of audit or a request to explain the origin of funds, contact a lawyer immediately. Ignoring such requests can lead to serious legal consequences, including asset seizure or fines; in the QuadrigaCX case, British Columbia even filed an Unexplained Wealth Order to seize assets if their origin was not confirmed.
Conclusion
Checking crypto wallets is not just a technical procedure, but a vital element of financial security. Use reliable tools for analysis and document the origin of assets to minimize risks. As the experience of the QuadrigaCX case shows, a lack of transparency can lead to serious consequences, up to and including the seizure of assets.