I've done this dance. Here's what actually happened.
Direct on-chain deposit to Coinbase: Flagged immediately. Not frozen, but "account under review" for 72 hours. They asked for source-of-funds docs. I sent the original Coinbase purchase receipt + withdrawal tx + CoinJoin tx + current wallet addresses. Account restored, but it was a pain.
Lightning route (Ledger → Zeus → Phoenix → Strike): Strike accepted the Lightning deposit with zero flags. No questions asked. The sats arrived, I sold to fiat, done. Lightning effectively breaks the on-chain heuristic chain for exchanges that don't trace Lightning subgraphs (most don't).
My recommendation: If you have documented origin (which you do), and the amount isn't massive, just use Lightning into Strike or Kraken. They treat Lightning deposits as "fresh" because they can't easily trace the submarine swap path. If the amount is large (6+ figures), do the direct on-chain route with docs ready — they'll ask, but you'll clear it.
Don't do: Reverse swap to fresh on-chain then exchange. You're paying fees for nothing — the exchange still sees it as a single UTXO deposit and can flag it just the same. Lightning is your friend here.
One caveat: this was ~8 months ago. Policies change. If anyone has more recent data points, chime in.
I've done this dance. Here's what actually happened.
Direct on-chain deposit to Coinbase: Flagged immediately. Not frozen, but "account under review" for 72 hours. They asked for source-of-funds docs. I sent the original Coinbase purchase receipt + withdrawal tx + CoinJoin tx + current wallet addresses. Account restored, but it was a pain.
Lightning route (Ledger → Zeus → Phoenix → Strike): Strike accepted the Lightning deposit with zero flags. No questions asked. The sats arrived, I sold to fiat, done. Lightning effectively breaks the on-chain heuristic chain for exchanges that don't trace Lightning subgraphs (most don't).
My recommendation: If you have documented origin (which you do), and the amount isn't massive, just use Lightning into Strike or Kraken. They treat Lightning deposits as "fresh" because they can't easily trace the submarine swap path. If the amount is large (6+ figures), do the direct on-chain route with docs ready — they'll ask, but you'll clear it.
Don't do: Reverse swap to fresh on-chain then exchange. You're paying fees for nothing — the exchange still sees it as a single UTXO deposit and can flag it just the same. Lightning is your friend here.
One caveat: this was ~8 months ago. Policies change. If anyone has more recent data points, chime in.