KYC/AML is ineffective

[libert19]

Criminals could also have intellectual backgrounds, so they know the loopholes. Never mind avoiding AML compliant services, in reality the KYC system can also be manipulated and criminals are still free to use those services.
I remember one of the CZ cases, where he allowed Chinese residents (who should be restricted) to use his exchange through insiders.

And the case where two brothers who went to MIT and got a bachelors degree in mathematics and I think computer science went into the Ethereum blockchain and hacked it for millions of dollars. How did they even do that anyway?  Because the way I'm familiar with things, transactions are supposed to be final once broadcast (and in Ethereum's case cannot be replaced by another).

Are you referring to 2016 dao hack? If so, there was hard fork which transferred funds from hacker's address to another address where dao depositors could withdraw their eth.

Read: https://ramiwrites.substack.com/p/the-dao-hack-that-changed-ethereums

[NotATether]

And the case where two brothers who went to MIT and got a bachelors degree in mathematics and I think computer science went into the Ethereum blockchain and hacked it for millions of dollars. How did they even do that anyway?  Because the way I'm familiar with things, transactions are supposed to be final once broadcast (and in Ethereum's case cannot be replaced by another).

Are you referring to 2016 dao hack? If so, there was hard fork which transferred funds from hacker's address to another address where dao depositors could withdraw their eth.

Read: https://ramiwrites.substack.com/p/the-dao-hack-that-changed-ethereums

Nope, there was another that happened recently where two MIT brothers exploited a vulnerability in a bunch of MEV-bots that run on the Ethereum blockchain to replace the destinations of all those user transactions inside with their own addresses, and they stole $25 million that way very quickly in the process.

There is a more detailed read-up here: https://www.coindesk.com/tech/2024/05/16/how-2-brothers-allegedly-cheated-a-noxious-but-accepted-ethereum-practice-for-25m/

[libert19]

And the case where two brothers who went to MIT and got a bachelors degree in mathematics and I think computer science went into the Ethereum blockchain and hacked it for millions of dollars. How did they even do that anyway?  Because the way I'm familiar with things, transactions are supposed to be final once broadcast (and in Ethereum's case cannot be replaced by another).

Are you referring to 2016 dao hack? If so, there was hard fork which transferred funds from hacker's address to another address where dao depositors could withdraw their eth.

Read: https://ramiwrites.substack.com/p/the-dao-hack-that-changed-ethereums

Nope, there was another that happened recently where two MIT brothers exploited a vulnerability in a bunch of MEV-bots that run on the Ethereum blockchain to replace the destinations of all those user transactions inside with their own addresses, and they stole $25 million that way very quickly in the process.

There is a more detailed read-up here: https://www.coindesk.com/tech/2024/05/16/how-2-brothers-allegedly-cheated-a-noxious-but-accepted-ethereum-practice-for-25m/

Thank you for sharing, this is quite complicated for me to understand, but little do I understand, this exploits mev bots, which exploit normal users, so it's kinda like robinhood thing in a way.

[Fivestar4everMVP]

If there is a billion or two in fraud that is actually stopped by the presence of KYC/AML, then that means that the introduction of this idea is not a complete waste, atleast, it has helped save something.

Of crime is this high even with the presence of KYC/AML, imagine what it would have been like if there was no KYC/AML at all, it would have been way worser than it is right now.
And what I am saying in essence is that, there was never a time the introduction of KYC/AML will completely wipe out crime in our society, it only helps to reduce it.

My personal opinion.

[philipma1957]

This is like having a ship in sea with thousands on holes in the bottom and water in leaking inside, and KYC government regulators are trying to close just one hole and they are telling us how this will stop the ship from sinking. 
All this KYC regulations for me is one big security theater, they know they can't stop any criminals like this, they just want more censorship and control of their citizens.
Silly excuse is that they are using KYC for our safety... as if we need more cameras, more taxes and more regulations.

Pretty much spot on. I will give you an example during covid my drivers license expired. My state said no worries use the expired one. I was unable to do kyc with binace.us I sent them a ton of info but they refused to allow the New Jersey driving id.. I had a passport which was close to expired and I it had been a month later it won have not been good. So kyc was a fail in my case. Close t ok a complete one.

[Aanuoluwatofunmi]

If there is a billion or two in fraud that is actually stopped by the presence of KYC/AML, then that means that the introduction of this idea is not a complete waste, atleast, it has helped save something.

It has saved something as you have said but not saved all, all these they think is happening and we are pretending as we we don't know the vulnerability in the government agencies as well as their corrupt practices, what we are here to factor out is the truth about the occurrence of crime in the fiat system being more aggressively higher than the one seen with cryptocurrency, despite all the KYC and AML regulation policies, they couldn't achieve a harmonized scam free society with the people in running their economy system.

[examplens]

I wouldn't say AML/KYC is ineffective. It was not primarily conceived as a control and fight against criminals, fraud or terrorism, but to have a better insight into the finances of ordinary people, possibly preventing tax evasion.
I would say that it is quite functional for this purpose, and the fight against crime, and terrorism is just an excuse for ordinary people to more easily accept various checks and controls.

[dkbit98]

Pretty much spot on. I will give you an example during covid my drivers license expired. My state said no worries use the expired one. I was unable to do kyc with binace.us I sent them a ton of info but they refused to allow the New Jersey driving id.. I had a passport which was close to expired and I it had been a month later it won have not been good. So kyc was a fail in my case. Close t ok a complete one.

Let's be honest, you can't expect anyone to accept your expired documents anywhere, but we are not talking about that here.
With recent new tools I have seen how easy is to trick exchanges and getting ''verified'' with randomly generated name/address on passport.
It's never been easier to get a fake ID:
https://cointelegraph.com/news/ai-generated-fake-ids-pass-crypto-exchange-kyc-onlyfake

[philipma1957]

Pretty much spot on. I will give you an example during covid my drivers license expired. My state said no worries use the expired one. I was unable to do kyc with binace.us I sent them a ton of info but they refused to allow the New Jersey driving id.. I had a passport which was close to expired and I it had been a month later it won have not been good. So kyc was a fail in my case. Close t ok a complete one.

Let's be honest, you can't expect anyone to accept your expired documents anywhere, but we are not talking about that here.
With recent new tools I have seen how easy is to trick exchanges and getting ''verified'' with randomly generated name/address on passport.
It's never been easier to get a fake ID:
https://cointelegraph.com/news/ai-generated-fake-ids-pass-crypto-exchange-kyc-onlyfake

well my motor vehicle in New Jersey shut due to covid. it shut for 21 months so my expired and the rest of the expired drivers licenses were allowed by the state of nj to drive.

officially. so all kyc businesses should have allowed the licenses. they did not allow it.

now I did have a soon to expire passport which did work. but i simply did kyc with three other places. then it expired and was not renewable for about ten months.

So basically i got lucky. I wonder if anyone did sue the exchanges over this. as the exchanges were legally obligated to accept a state driver’s license.  and the state NJ extended them for over a year.

[NotATether]

well my motor vehicle in New Jersey shut due to covid. it shut for 21 months so my expired and the rest of the expired drivers licenses were allowed by the state of nj to drive.

officially. so all kyc businesses should have allowed the licenses. they did not allow it.

now I did have a soon to expire passport which did work. but i simply did kyc with three other places. then it expired and was not renewable for about ten months.

So basically i got lucky. I wonder if anyone did sue the exchanges over this. as the exchanges were legally obligated to accept a state driver’s license.  and the state NJ extended them for over a year.

Crypto exchanges in particular are infamous for their non-compliance to various laws of jurisdictions, so I am not surprised that Binance and others were giving you trouble over your driver's license. Somebody has to literally threaten them with penalties before they comply - but what usually happens instead is that they end up getting out of the area to avoid implementing new compliance stuff.

[libert19]

Somebody has to literally threaten them with penalties before they comply - but what usually happens instead is that they end up getting out of the area to avoid implementing new compliance stuff.

That's actually true; here in India Binance were warned for not complying and were told that if they were to continue with non-compliance they'll get blocked and guess what? They continued with non-compliance and did get blocked (up until this moment Indian users can't access binance's app and website even though there were news that Binance is to restore access to Indian users).

[Cryptsafe]

Somebody has to literally threaten them with penalties before they comply - but what usually happens instead is that they end up getting out of the area to avoid implementing new compliance stuff.

That's actually true; here in India Binance were warned for not complying and were told that if they were to continue with non-compliance they'll get blocked and guess what? They continued with non-compliance and did get blocked (up until this moment Indian users can't access binance's app and website even though there were news that Binance is to restore access to Indian users).

That is what happens when they fail to comply with the standing regulations. Here in my country, binance officials was held in my country for operating without complying with existing regulations but it happened that they weren't supposed to be held on behalf of binance but binance as a whole but binance has no office in my country and we came to realise that all the saga was all about tax payment.

However the binance the government dropped the charges against the officials. One thing I noticed was that hey were all holding each other for the tax which is normal but the truth is that after paying the tax would the government be accountable for the tax paid? Even with all these data going on citizens were still accessing binance website and doing their trade but binance removed the our p2p from their platform. So it happened. KYC is just a waste of time they would do whatever they feel like doing no body cares.