So once in a while I will see a ton of people complain they got their centralized exchange account closed. Like if you go on Coinbase there is a few right now where they are suspended or closed. Same on Binance and other places.

For example https://np.reddit.com/r/CoinBase/comments/14h5cgj/account_closed_for_terms_of_service_violations/

One of the go-to for most is assume the person broke some TOS. Like using their crypto for betting. And while I don't see it as often anymore. I did see in the past there some flat out weren't using their account but to hold BTC.

A few important things to note:

1. We all heard not your keys, not your crypto. But why is this important? When you deposit your crypto on a CEX, then you lose control of the crypto. And in many cases, it stops being your crypto all together. Think of it like a bank. When you hand your money over to the bank the $ you see is an IOU. But the actual money is 100% the banks.
2. Most TOS has a legal thing where they can close your account for any reason they want. Now while they can't close the account because the color of your skin, so that isn't true. Outside of flat out discrimination, they can close your account. And sadly, with modern laws like the banks where they won't give you the money back. CEX generally won't give you any crypto back.
3. TOS can change over time. And to be blunt, I think breaking a TOS in the AI age will likely happen less and less as you likely will be interfacing with one and it will give you a heads up prior. For now, they could change their TOS tomorrow to say because the sky is blue your account gets locked.
4. By putting your stuff on a CEX you are heavily depending on their support if something goes wrong. And keep in mind it is highly subjective when dealing with them, most don't like their job, most don't care, and most of us has had horrible experiences with support both in and out of crypto.

So what should you do?

First thing is first, note any TOS stuff. AI right now is free. Throw the entire TOS into any of the chatbots. Some you can link them to it.

Lets be brutely honest. It is likely you will never read it just like you likely never read a single crypto white paper (assuming you even know what that is). It might have technical or legal wording in it, it tends to be long, and it is a pain. On virtually any AI you can do a explain it like I'm 5 and most can dumb it down. In some cases you can tell it what you want to do, and it can tell you if you will be inside of the TOS.

Next, it is HIGHLY recommended that you use CEX as a on/off ramp. I'm not saying never keep crypto on it. I'm saying, it isn't smart to keep a lot of value on it unless if you are doing something with it.

Personally, unless if I'm day trading, unless if the value is so low (or gas fee is so high) and I can't easily keep the asset outside of an exchange, or something like that. I tend to move it all to my own wallets. If possible a cold wallet, but a hot wallet is better than nothing.

Expect anything you put on a CEX to be lost forever if the account ever gets flagged.

If you are moving or trading a large amount of value. Then give the CEX a heads up prior.

Oh, and don't live in fear. The likely of your account being shut down on something like Coinbase or Kraken is actually pretty low. Keep in mind while you might see problem post once in a while. Keep in mind the amount of active users they have, and you're likely seeing only a fraction of a fraction of percent speaking up about a problem.

Still, because this could legit be your entire life in their hands. You need to seriously look at self custody.

If problems do happen, what now?

1. Contact support, but log everything
2. USE AI. Again, it is free. It isn't always right, but it is a tool you can use. You can tell it the problem, tell it what is going on, and what is being said. It can give you another perspective. In fact, if you want to off load the stress. You can easily tell it what you want. And act as a man in the middle between you and the support, and the AI can help with the stress (obviously monitor what is being said and don't feed cloud base AI personal info).
3. Talk about it on social media. Sometimes this works in getting someone to lose at your case.
4. At worse case, contact a lawyer to see if it is even worth it and what can be done. But be prepared for them to saying it isn't worth your time.

UPDATE:

I forgot to give a bonus tip.

We all want our holdings to make us millions. Before cashing out $5k+ (in some cases $1k+). It is best to contact the CEX about their policy and how much liquidity they have. This does 2 things.

1. They hopefully are less likely to screw with your account
2. Some people have screwed themselves by selling $40k at a major discount instead of breaking it in smaller chunks. It is best to talk with them to figure out the size so you don't over stress their network. Same with buying.