Thoughts about tech, programming, and more.

Crypto & Bitcoin Wallets Cannot Be Frozen

I'm feeling quite suspicious about all these reports coming out right now stating that crypto and bitcoin wallets are being frozen. It comes across as very deceptive.

With the way these things are being reported, it makes me wonder if they’re purposely attempting to delegitimize crypto.

If it is not intentional, then these journalists are all painfully uninformed and are doing a terrible job of properly researching and understanding the subjects they are reporting.

Crypto wallets cannot be frozen.

But if crypto wallets cannot be frozen, what are they actually doing? Why can't these people access their bitcoin or other crypto?

What they’re doing is freezing accounts associated with those wallets – or more specifically – crypto exchange accounts, not wallets. There's a big difference.

For example, if you created an account through a crypto exchange service like Coinbase, Newton, Kucoin, Binance, etc.,, when you sign up for that service and deposit or purchase Bitcoin or another cryptocurrency, that exchange will create a wallet and link it to your account. Your crypto wallet is managed by the service you signed up with.

Since this business is involved in your transactions by facilitating the transactions on your behalf, the business can also be held responsible, to a certain extent, for providng service to you.

The government can order these businesses (the crypto exchange service) to disable your account that was used to access the keys to your wallet. Without your account, you can’t access your wallet because your wallet was created by that company.

The company will disable your access, otherwise face penalty from the government.

The wallet still would exist but you wouldn’t be able to access it anymore because the account associated with your wallet is frozen, and you never held the keys to the account, the crypto exchange did.

Technically what is happening here is a sanction has been placed against your crypto wallet addresses. The government has made it unlawful for businesses to conduct any kind of business with that particular crypto wallet addresses.

This is why cold storage wallets like Ledger or wallets like Metamask are crucial.

Cold storage wallets are accessed directly by you and you hold the keys yourself. No third parties are involved and since you hold the keys, there is no way for your access to be removed (unless you forget or lose your keys).

Cold storage: No third parties involved. No companies or exchange services that can disable your account and block your access to your wallet. Your wallet and keys are owned directly by you.

The rule of thumb is:

  • Use exchanges and accounts like Kucoin, Kraken, Newton to trade or as an on-ramp to purchase crypto, but never hold as a form of long term storage.
  • Use cold storage wallets (like a Ledger) for holding long term (like a savings account).

If you purchased Bitcoin on an exchange like Kucoin or Newton and don’t plan on trading but are holding long-term, it’s much safe to transfer your Bitcoin to a wallet like Ledger for safekeeping.

All that being said, it should always be remembered that Bitcoin is not private. Anonymous – yes, to a certain extent if you rotate addresses – but not private.

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Jamie Larson