0.7 BTC Unblocked After AML/CTF Review by a Crypto Exchange
Executive Summary
A client approached P&P after a crypto exchange service froze a transaction involving 0.7 BTC. The client had transferred the bitcoin to the service to convert it into USDT, but the transaction was stopped for an AML/CTF review. The provider requested information about employment, sources of income, the transaction history and purpose of the assets, supporting documents and KYC information involving both the client and the original sender. P&P prepared the documentation package, reconstructed the transaction chronology and coordinated communication with the provider’s support and security teams. Work began on Monday, and the funds were fully unblocked by Wednesday.
Client Context and Objective
The client had received 0.7 BTC and subsequently transferred the assets to a specialised crypto exchange service for conversion into USDT.
Immediately after the bitcoin was sent to the provider, the transaction was frozen. The client’s objective was to respond to the compliance requirements and regain access to the assets.
The AML/CTF Challenge
The exchange service initiated an AML/CTF review and requested a detailed evidentiary response. The requested information covered the client’s employment status, sources of income, the history of funds before they reached the sending wallet, the purpose for receiving the cryptoassets and supporting documentation.
An additional dependency was the provider’s requirement for KYC information relating not only to the client but also to the original sender of the bitcoin.
P&P Work
- Review the provider’s AML/CTF requirements. P&P analysed the information requested by the exchange service and structured the response around the specific compliance questions raised.
- Reconstruct the transaction chronology. The team organised the available transaction information to explain the movement of the assets before the 0.7 BTC reached the wallet used for the exchange.
- Prepare the supporting documentation package. P&P helped compile the records required to explain the source and purpose of the assets and address the provider’s evidentiary requirements.
- Coordinate the compliance communication. The team maintained professional communication with the exchange service’s support and security functions throughout the review process.
Roles and Responsibilities
The client provided the information and records available for the review. The exchange service required information concerning the client and the original sender as part of its KYC and AML/CTF process.
P&P structured the documentation, reconstructed the transaction chronology and coordinated the compliance response. The exchange service conducted its internal review and made the decision to release the frozen assets.
Deliverables
- A structured documentation package addressing the exchange service’s AML/CTF requirements.
- A documented chronology of the relevant crypto transactions and movement of funds.
- Supporting materials explaining the source and purpose of the assets for the compliance review.
Result
The 0.7 BTC was fully unblocked by Wednesday after P&P began work on the matter on Monday. The client regained full access to the cryptoassets.
| Before the engagement | Outcome |
|---|---|
| The 0.7 BTC transaction was frozen while the exchange service conducted an AML/CTF review. | The compliance review resulted in the assets being fully unblocked and access restored. |
Practical Lessons
- Reconstruct the full transaction trail. When a provider requests source-of-funds evidence, the relevant history may extend beyond the final transfer that triggered the review.
- Identify third-party KYC dependencies early. A compliance review may require information relating to another participant in the transaction, not only the account holder or recipient.
- Respond to the exact AML/CTF request. Employment information, income evidence, transaction history and the purpose of the assets should form one consistent evidentiary position.
- Keep the external decision separate from the legal work. P&P prepared and structured the response; the exchange service conducted its internal review and released the assets.
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