Editor's note: This story was updated October 6 with further comment from Uphold. Additionally, the company provided the following statement with regard to the status of Venezuelan Uphold accounts: "As of [two weeks ago], Venezuelans can fund their Uphold accounts through crypto deposits, debit/credit cards and U.S. bank accounts via an embedded verification service called Plaid. And they can trade and withdraw funds normally—just like anyone else in any other country we support."
In recent weeks, a growing number of Venezuelans have lost access to their accounts on U.K.-based cryptocurrency exchange Uphold.
And while the company insists that there is nothing unusual about the account closures, users are convinced that the trend is no coincidence—and may even be politically motivated, given recently broadened sanctions against the government of President Nicolas Maduro.
Uphold’s trading platform is popular among Venezuelans. In fact, the firm recently boasted through social media that Venezuela is one of the leading financial destinations among its Spain-based users, with a volume of remittances and receptions that exceeds $1 million each. A sudden and seemingly inexplicable shutdown of multiple Venezuelan accounts would not go unfelt.
José Parra, a Venezuelan trader and Bitcoin miner, was one of those affected. Parra told Decrypt that Uphold recently closed his account after a year of normal use of the platform. According to Parra, it all started in late July, when the Uphold team made a series of unusual requests in order for him to remain in compliance with KYC policies.
In a series of emails between Uphold and Parra, which the crypto trader shared with Decrypt, the company asked for information that goes beyond typical know-your-customer compliance, including a written explanation of the source of his funds, the reason for each of his withdrawals, a list of all the wallets he used, and an explanation of his relationship with the users to whom he had sent funds.
“I am a verified member since January 2018, and this request was very abrupt,” he said. Nevertheless, Parra said he complied with each of Uphold’s requests and sent the supporting information. But the unorthodox demands would not stop there.
On August 5, Uphold responded with requests for more information from Parra, including questions about his mining operations, according to the emails shared with Decrypt. Uphold asked Parra questions regarding his use of ASICS or other mining-rig equipment, his hashing power, monthly crypto earnings, which tokens he mines, and how the profits of his mining activity are divided among Uphold and other wallets.
Parra, again, complied, despite feeling that the company’s demands went too far. Yet it wasn’t enough.
Uphold terminated Parra’s account shortly thereafter, offering no further explanation. And the ordeal appears to not have been an isolated incident.
In mid-August, an Instagram post grouped several complaints from other users reporting the same problem. Among them, Instagram user “anibalsati” claimed that this is the third such wave of targeted shutdowns of Venzuelan accounts in the last two years. Another user, “rjog17,” agreed and added that Uphold is deliberately restricting its platform from users in Venezuela.
Franci Reyes, another former Uphold user based in Venezuela, told Decrypt that she and her husband went through the same scenario Parra described.
“My husband and I had accounts in Uphold. Initially, he got an email from Uphold informing him that his account was blocked, and he needed to send information and evidence regarding the origin of the funds,” Reyes said. “After fulfilling all the requirements, Uphold sent an email saying that we had 12 hours to withdraw our funds because our accounts were being terminated.”
A large number of other users have taken to both Instagram and Twitter to recount the same story. And they’re convinced the increased scrutiny on Venezuelan accounts and subsequent closures are the result of economic sanctions led by the United States and President Donald Trump against the socialist government of Venezuela.
Response from Uphold
Uphold CEO Juan Pablo Thieriot, however, dismissed the possibility of the account closures being at all motivated by politics.
“There is not a one-size-fits-all reason behind the closing of accounts,” Thieriot told Decrypt. “A frequent cause for closing accounts, especially in Venezuela, is because users operate outside of our terms and conditions of service,” he said.
Thieriot also explained that the closing of Uphold accounts linked to bank accounts was due to an unusual increase in fraud related to automated clearing house (ACH) services. “To be clear, existing Uphold members whose accounts are connected to bank accounts can still withdraw/deposit using ACH,” he said. “The temporary suspension was due to the incorporation of new fraudulent accounts.”
When asked directly if the recent increase in sanctions and talk of a possible blockade or embargo imposed by the United States accounted for a shift in Uphold’s policies, Thieriot said: “Uphold is fully committed to complying with the laws that apply in each of the jurisdictions in which it operates.”
But part of that compliance does appear to be related to Venezuela’s present political and economic predicament. In the email that informed Parra that his account would be closed, Uphold made reference to “strict restrictions” that rendered the decision final. “It is not possible for [users in] Venezuela and Russia to add U.S. accounts,” another email read.
“They asked me for things that go beyond what they should demand, and I still sent them everything,” Parra said. “In the end, they played deaf to justify closing accounts. I know several [other] people to whom Uphold has done the same thing,” he said.
Uphold, however, insists that the information it requested from Parra is nothing out of the ordinary, including questions about his crypto mining operations.
“As a regulated company, we are required to have this kind of information.” Thieriot said. “If a user operates as a company or sends/receives a high amount of money, it is necessary to know the source of those funds. In this way, they meet the KYC and AML requirements,” he said.
The precise number of Venezuelans affected by the recent wave of closures is unknown, but the number of instances so far indicates a process that goes beyond mere coincidence.
Uphold, however, is adamant that it was all precisely that—coincidence. The company claims to have "signed up almost 29,000 accounts in Venezuela in the last 90 days," according to an Uphold spokesperson, suggesting that the number closures is insignificant by comparison.