Binance faced backlash for freezing user accounts without explanation, leading to infuriated users intending to sue the company.
Binance tweeted that they had found some Australian users misclassified as 'wholesale investors' on Binance. According to the regulations in Australia, Binance had to notify these users and immediately close any derivative positions they had. Binance also clarified they contacted the affected users and would make compensation. Although Binance's response to this incident is yet to be given a final evaluation, it is undoubtedly a profound lesson for the cryptocurrency market and investors.
The recent freeze of Binance accounts has made many people question the trustworthiness of such services. Although countries around the globe are beginning to regulate cryptocurrency, investing in it still carries certain risks.
Freezing accounts or halting withdrawals are not rare in the world of forex trading. However, more often than not, that happens to victims of smaller-scaled brokers (note that Binance is the largest cryptocurrency platform in the world) and on a more regular basis. Most brokers make depositing money simple, but other brokers make it challenging when it comes time to withdraw it. Typical strategies include:
- requiring additional paperwork and identity checks that the broker did not make clear to you upon registration or account opening. Sometimes it can be challenging to secure those documents.
- withdrawals being frozen because of “security concerns” or “identification verification concerns,” with no effective way to contact support and lift the freeze.
- blocking your account entirely following your initial withdrawal request.
This scam is widespread and enables brokers to keep your money. Unfortunately, there may be no way to get the broker to return your money unless they are regulated and based in a nation that upholds those standards.
Remember to always verify a forex broker's regulatory status and perform thorough due diligence. A legitimate governing body ought to be in charge of overseeing it. Verify the licences for the platforms, then visit the licencing authority's website to confirm the licence's validity. You should confirm the legitimacy of the financial institution issuing the licence.
Reputable regulators include:
- FSC (Mauritius Financial Services Commission)
- FCA (UK Financial Conduct Authority)
- FSCA (South Africa Financial Sector Conduct Authority)
- SCB (Securities Commission of the Bahamas)
- IFSC (Belize International Financial Services Commission)
- CySEC (Cyprus Securities and Exchange Commission)
Download the free WikiFX mobile application on Google Play/App Store to make this process simple and time-efficient. WikiFX is a dedicated platform that houses information of over 43,000 brokers throughout the globe while working hand-in-hand with national regulators.
Every broker's license and regulatory information could be easily found in WikiFX's database. Here are some examples to illustrate how straightforward this process is:
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