Crowdsale KYC is Fueling a Black Market for Fake ID

KYC for crowdsales has been intended to add supervision and validity to a mostly unregulated space. Rather it is left shareholders vulnerable to information breaches, identity theft and blackmail. Given the dangers, it is clear that some ICO investors have resorted to purchasing fake ID.

Purchasing fake ID is a rite of passage for teens desiring to be marketed alcohol. Know Your Client (KYC) requirements, that are now prevalent, were created to display out US and Chinese traders, and also to dispel the idea that ICOs are still unregulated. But instead than strengthening the business’s reputation, they have made an abysmal mess.

Dedicated Telegram channels concentrate on the purchasing and selling of fake IDs, complete with all of the resources that an investor should pass crowdsale KYC: passport scan, selfie, scanned bank announcement; the functions. Commonly sourced from Russia, these may be gotten for as little $50 — and it is not only Americans and Chinese that are purchasing them. Investors who live in countries that allow ICOs also have been ripping up fraudulent IDs as a way of protecting their particular individuality.

Blackmail, Data Loss and Doxxing

With 80% of the year’s ICOs trading below their public sale price, investing in crowdsales is a risky companies. Throw in mandatory KYC, and these risks are significantly heightened. Lots of projects are compromised through the hacking of their third party handling their KYC, while others have experienced their mailing list leaked. In every instance, investors have been vulnerable to being doxxed, and there were reports of blackmail.

Once hackers have got the email addresses of investors, they’ll either attempt to socially engineer them; sell the speeches on the black market; or claim to have filmed the victim watching online pornography, threatening to send the movie to their friends and family if they don’t pay a ransom. Given these dangers, buying a fake ID to pass KYC appears like the lesser of 2 evils. Tezos forcing KYC on its own community one year after they’d invested, essentially holding their tokens to ransom, has further fueled the need for fake IDs.

A typical Online Ad offering fake ID

Many cryptocurrency investors take, albeit reluctantly, that KYC is a necessity for trading on centralized exchanges. The situation for forcing KYC on crowdsales is much harder to justify. Given that the hassle and dangers involved, it is no wonder many investors choose to wait and pick up tokens on IDEX, in which there is no proof and coins may frequently be found at half the price.

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