Major exchanges are registered or licensed in the jurisdictions they serve, verify customer identity, and run compliance functions that respond to law enforcement and to fraud reports.
When traced funds arrive at an exchange, the onchain trail effectively stops — but the usable trail begins, because the exchange holds an identity record behind the deposit. Speed matters: an exchange can only restrict a balance that is still there.
Related terms
Deposit address
An address a service issues to a specific customer so incoming funds can be credited to their account.
KYC
The identity checks a regulated business performs on its customers, and the records it keeps.
Custodial account
An account where a business holds the keys on your behalf — most commonly an exchange account.
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