Crypto KYC Requirements Are Causing Black Market Demand for Fake IDs to Thrive

How KYC Requirements Are Intensifying The Demand For Fake IDs

When it became apparent that criminals were capitalizing on the anonymity of cryptocurrency transactions to fund their unlawful activities, many stakeholders, especially governments, called for the enactment of countermeasures. As a result, KYC regulations were formulated with an aim of legitimizing the substantially unregulated crypto space. However, KYC has significantly failed to achieve its objectives. Instead, it has increased the vulnerability of investors by exposing them to data breaches, blackmail and identity theft. Consequently, some investors have decided to use fake IDs to avoid the demerits of KYC.

The Increasing Demand For Fake IDs

Traditionally, fake IDs were used by underage persons to acquire stuff that is designated for adults or to gain entry into the age-restricted area. Lately, the demand for fake IDs has intensified considerably throughout the internet, with the primary reason being the desire to participate in crypto projects rather than purchasing something illegal. Notably, the proliferation of fake IDs is also due to the epic failure of the KYC standards, which initially sought to verify the identities of crypto investors, but have ended up creating an enormous disarray.

Surprisingly, finding a fake ID is not as difficult as it seems, although this is a criminal offence. There are several channels on the Telegram messaging application that specialize in the creation of counterfeit identities. As expected, these dedicated services provide their clients with the comprehensive KYC package that normally includes a selfie, a passport scan, recent bank statements, and so on.

Most of these solutions are based on Russia, and their online presence means that they are available to anyone across the globe. Besides the relative ease of acquiring these fake documents, they are equally as cheap, with some going for a paltry $50. As per the stats, most of the buyers are of American and Chinese descents, although others occasionally purchase such items.

The Shortcomings Of KYC

Despite having remarkable performance throughout 2017, ICO projects have been somewhat appalling since the beginning of this year. If you add the obligation to comply with KYC standards, trading in the crypto space becomes almost untenable due to the increased riskiness. Since most of the crypto startups delegate KYC handling to third-parties, hackers capitalize on this to obtain client details. Using such crucial information, they often proceed to attempt social engineering or even blackmail, albeit in rare instances.

As mentioned above, KYC details can be detrimental if they fall into the hands of hackers. For instance, classic blackmail cases using such data may result in the affected user paying hefty amounts as ransom. Therefore, the acquisition of a fake ID is a necessary evil, as it mitigates the vulnerability of an investor's credentials.

Nevertheless, a significant majority of crypto investors concur that digital asset trading platforms must comply with KYC standards, although half-heartedly. On the other hand, these traders also feel that the enforcement of KYC on ICO events is baseless. Therefore, many investors currently prefer to bypass the ICO stage and wait for the token listing on IDEX, mainly because it does not require verification of identity and the coins are available at an affordable price.

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