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According to a recent analysis by security-focused triaging platform CertiK, rogue developers are increasingly using a vast underground network of know-your-customer (KYC) actors to defraud Web3 communities.
“Basic KYC controls are often effective in upsetting honest retail users, but unfortunately not so effective in preventing certain criminals from defrauding victims and laundering their stolen funds. In fact, CertiK's research confirms that criminals have developed various ways to circumvent regular checks and the existence of professional 'KYC actors' illustrate how easy it is to evade responsibility,” according to the company.
CertiK admits that among the many tactics employed by crypto developers looking to scam communities and investors, the use of a KYC actor is one of the most fascinating tactics that have been detected and investigated by the firm. in this day.
“In our context, a KYC actor is someone specifically hired to KYC on behalf of rogue project owners looking to gain trust in the crypto community ahead of an insider attack or exit scam,” says CertiK, providing insights on the process based on an interview that their experts conducted with one of the identified KYC actors.
“According to this actor, it is surprisingly cheap and easy to hire someone to KYC for a fraudulent company. He detailed how he had been posing for fake KYC for over 3 years and how easy it was for him to pass regular KYC verification." said the platform.
That being said, the reality of the undercover KYC actor's life is not as glamorous as some might hope, as most KYC actors operate in developing countries and are paid less for each "role" entrusted to them by criminals. The interviewed actor's earnings amount to just €20 to €30 per transaction, according to data collected by CertiK.
These revenues could even be lower, as the company's survey shows. CertiK said its experts have carefully analyzed the activity of more than 20 underground over-the-counter (OTC) marketplaces, most of which are hosted on Telegram, Discord, as well as some low-demand phone apps, combined with online offerings. published works. on concert websites.
“The cost of a KYC actor can be as low as €8 if the gig requirements are low, for example skipping a basic KYC process to open a developing country bank or foreign exchange account. The price increases if the KYC actor faces a more complex verification process, and jumps significantly if the buyer requires an actor who is a national resident of a country considered low risk for money laundering,” according to the analysis.
CertiK has acknowledged that in some cases, KYC actors posing as high-profile individuals, for example by pretending to be the CEO of a crypto project, are paid up to €500 per week.
The global prevalence of these OTC markets is significant and the South East Asia region represents an above average concentration with groups of between 4000 and 300 members.
“We counted a staggering total of more than 500 members who were buyers or sellers of these underground currency exchanges and fake KYC services,” according to the platform.
CertiK advises that cooperating with or investing in a Web3 startup requires the highest level of due diligence, and the only way to effectively verify the team behind a cryptocurrency business is to conduct a thorough and thorough investigation of each of its members. key code. .
It is vital "to ensure that this investigation is carried out by a team of professional and experienced criminal investigators and intelligence analysts," according to the firm.