Part of the CustodyStress archive of observed Bitcoin custody incidents
Legal or authority constraint
Cases in this category involve situations where legal or institutional constraints prevented or delayed access by a party with legitimate authority.
Legal authority constraint cases expose the gap between legal entitlement and operational access. Cases involve estate proceedings, regulatory freezes, sanction compliance, and jurisdictional conflicts. In many cases, the party seeking access has clear legal authority; the constraint is institutional or procedural rather than technical.
39 observed cases
Blocked
5 (13%)
Constrained
24 (62%)
Survives
4 (10%)
Indeterminate
6 (15%)
The government subsequently blocked access to the websites of these exchanges
Exchange custody
Indian crypto exchanges faced a series of enforcement actions in 2023. India's Financial Intelligence Unit issued show-cause notices to several offshore exchang
Binance CEO Changpeng Zhao pleaded guilty to federal money laundering charges as part
Exchange custody
In December 2023, Binance CEO Changpeng Zhao pleaded guilty to federal money laundering charges as part of a $4.3 billion settlement between Binance and US auth
Circle's USDC briefly de-pegged when $3.3 billion of its reserves were confirmed at SVB.
Exchange custody
The March 2023 collapse of Silvergate Bank and Silicon Valley Bank—both of which provided banking services to crypto companies—caused temporary access disruptio
The wallet held Bitcoin that had not been demonstrated to be connected to any illegal
Hardware wallet (single key)
A 2023 civil forfeiture case involved US authorities seizing a hardware wallet from an individual as part of a broader financial investigation. The wallet held
Platform bankruptcy — exchange custody (2023)
Exchange custody
The US Department of Justice filed a motion in June 2023 to block Bittrex's plan to repay customers before government creditors—including OFAC (owed $24 million
Platform bankruptcy — FTX (2022)
Exchange custody
The Bahamas Securities Commission froze FTX Digital Markets' assets and transferred approximately $3.5 billion to a government wallet on 12 November 2022, one d
Several Indian exchanges that had not built TDS infrastructure suspended trading
Exchange custody
India's Finance Ministry introduced a 30% flat tax on cryptocurrency gains in April 2022 along with a 1% TDS (tax deducted at source) on every transaction. Seve
Several exchanges, including Coinbase and Kraken, received orders to freeze specific
Exchange custody
In February 2022, the Canadian government invoked the Emergencies Act to freeze bank accounts and financial assets—including cryptocurrency—of individuals assoc
Sanctions lockout — hardware wallet (2022)
Hardware wallet (single key)
On 8 August 2022, OFAC sanctioned Tornado Cash, a smart contract-based cryptocurrency mixer, making it illegal for US persons to interact with the protocol. Sev
Sanctions lockout — exchange custody (2022)
Exchange custody
Following the Tornado Cash sanctions in August 2022, USDC issuer Circle blacklisted wallet addresses associated with the sanctioned smart contracts. Holders of
The EU's seventh sanctions package in July 2022 included specific provisions targeting
Exchange custody
Following Russia's invasion of Ukraine and subsequent EU sanctions, European exchanges were required to freeze accounts belonging to sanctioned Russian individu
Platform bankruptcy — FTX (2022)
Exchange custody
The SEC and CFTC both claimed jurisdiction over FTX assets following the November 2022 bankruptcy, creating regulatory overlap that complicated and delayed the
This multi-party legal structure—standard in large Chapter 11 cases—meant
Exchange custody
In the Celsius bankruptcy proceedings, the US Trustee's office, the Celsius creditor committee, and the examiner appointed by the court all conducted overlappin
Texas, New Jersey, and Vermont all took regulatory action in November 2022
Hardware wallet (single key)
Following FTX's collapse, several US state regulators issued emergency cease-and-desist orders against crypto lenders and exchanges with a US nexus. Texas, New
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