Over 500k users are involved in phony KYC services: survey


The Web 3.0 community is being defrauded by dishonest project development teams utilizing KYC actors. Over 500,000 individuals have reportedly bought or sold using phony KYC services, according to a survey by Certik. A KYC actor can cost as little as $8, especially in Southeast Asia.

KYC actors have gone rogue

The fundamental KYC verification may only apply to law-abiding, ordinary investors, but it is insufficient to deter professional criminal groups from defrauding and laundering money.

Certik, a certified platform that examines and monitors blockchain technologies and DeFi initiatives for security, conducted a survey that revealed how some crypto investors have been using “KYC actors.” 

According to the Certik report, criminals have developed numerous strategies to get through normal inspections. The advent of professional ‘KYC actors’ further demonstrates how simple it is to avoid accountability.

These KYC actors are independent contractors who carry out KYC validation for dishonest project owners. This makes it possible for projects to win over the community’s trust before insider threats or exit schemes.

In a unique situation, CertiK investigators identified and verified a KYC actor. After that, the subject freely revealed much information regarding the KYC actor’s work method and industry.

One of the actors speaks out

The interviewed actor claimed that hiring someone to commit KYC fraud is simple and inexpensive. The actor demonstrated how he repeatedly faked the KYC identity verification over three years and how simple it is to get around routine KYC verification.

Additionally, he displayed the transaction proof of his KYC compliance and the link to the black market where he could locate illegitimate purchasers.

The life of this undercover actor is not as glamorous as that of a Hollywood celebrity, though. The interviewee’s revenue is only $20 to $30 for every transaction. He claims that most KYC actors are from developing nations, where pay for each job is minimal.

A deeper scrutiny

Certik analysts looked more closely at the KYC black market to comprehend the issue better. Before confirming the transaction, which is frequently done using an escrow service, buyers and sellers usually meet in these over-the-counter markets and agree on a price based on their unique transaction demands.

If the performance criteria are simple, like opening an account with a bank or exchange in a third-world country without going through the minimum KYC verification process, the cost of a KYC actor might be as low as $8.

The research revealed that this over-the-counter black market is widespread worldwide, particularly in Southeast Asia, where the group’s membership ranges from 40 million to 300 thousand.

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