KYC as a big loophole. Abuse and how to fight against it?

[examplens]

A thread on Bitcointalk got me thinking again about the topic of KYC, particularly about its abuse. A user started a scam accusation discussion against the Changenow exchange, where they held back slightly more than 1 Ethereum. Before that, they requested KYC, which the user complied with, and the funds came directly from other exchanges, meaning there's a low chance it was illegal money.

So, Changenow decided, based on their assessment, to request personal information and manage those funds further. They did not provide any further explanation, whether an official authority requested it or what would happen with the disputed funds.

Recently, there was a case where the German government seized 47 instant exchangers for operating outside the law, unregistered, and also employing the practice of freezing funds and complicating the process with KYC requirements.

The biggest obstacle, generally, is that the 'victim' is usually not from the same country as the exchanger, everything happens online, and it’s very hard to legally recover the funds. Especially when it involves 'smaller' amounts, although I wouldn’t say that $2,500 is a small amount for everyone. Mandatory KYC has been imposed as a regulation, but it seems like it's an open loophole for abuse and 'legalized' taking of funds.

How can we even fight against this practice, aside from avoiding such services, what if it happens, like in the case mentioned above? Is it realistic to form some kind of association that would protect crypto users, perhaps even have legal representatives in the most common countries?

[_act_]

How can we even fight against this practice, aside from avoiding such services, what if it happens, like in the case mentioned above? Is it realistic to form some kind of association that would protect crypto users, perhaps even have legal representatives in the most common countries?

If it is small amount of money, there is nothing that can be done. There is no crypto association that have been established to combat such issue. It is better to avoid using such service when there are some that you can even used with VPN and Tor and nothing like KYC will be asked from you to provide for verification. KYC has led to many abuses.

[TomPluz]

How can we even fight against this practice, aside from avoiding such services, what if it happens, like in the case mentioned above? Is it realistic to form some kind of association that would protect crypto users, perhaps even have legal representatives in the most common countries?

Realistically speaking, the best way we can protect ourselves from these idiotic crypto platforms is to stay from them. Seems to me that we are on the losing end like in the case mentioned above most especially if you are not a citizen of the same country where the exchange is based. In other words, you are at the mercy of these people...and I am sure they got really that intention to "scam" people using KYC as the shield and basis. If the government is requiring these platforms to ask KYC from their customers, there should be a protection from the government from abusive platforms who are using KYC to victimize people. Now, of course, there should be an association that can help protect the victim and if necessary help in recovering the funds lost. I am hoping that someone would be generous enough to start such an organization and I am willing to be a part of it if there is one.

[Mia Chloe]

How can we even fight against this practice, aside from avoiding such services, what if it happens, like in the case mentioned above? Is it realistic to form some kind of association that would protect crypto users, perhaps even have legal representatives in the most common countries?

Realistically speaking, the best way we can protect ourselves from these idiotic crypto platforms is to stay from them. Seems to me that we are on the losing end like in the case mentioned above most especially if you are not a citizen of the same country where the exchange is based. In other words, you are at the mercy of these people...and I am sure they got really that intention to "scam" people using KYC as the shield and basis.

Let's start with a couple of obvious fact, one reason why KYC is gradually getting mandatory in a lot of crypto platforms is because of government regulations and restrictions. And in addition to this we have just a handful of persons who really care much about their privacy compared to those that really don't mind carrying out any level of KYC required by these sites.

Threads like this are meant to help people become better aware of their privacy and avoid useless KYC verifications as much as possible however the truth remains some persons no matter what will still prefer to carry out multiple KYC verifications. To some level it seems like they actually believe that organisations and platforms that collect their KYC data actually keeps them safe and as a result they seem to believe there is no harm trust them with it.

[Sim_card]

I think there is nothing anyone can do to these exchange that are using KYC as a tool to withhold customers funds. The best way we should go about it is avoiding centralized exchanges so that we don't fall victim to them because there will be no way one can get back his funds. Who knows maybe with time a legal crypto body would be formed to fight for victims in such situation as stated by the OP.

[BitMaxz]

It's government I don't know if we can fight them and force them to remove mandotory KYC. Some exchanges like gate.io also use AML as their legal defensive to froze customers funds. that's the way how they scam people unlike what happen to someone on Binance If I remember correctly, someone's account was frozen due to depositing funds from a casino, he was refunded and the funds were returned to the sender's address.

The government's desire to control people makes me believe that this is a problem that will never be solved(loophole).

[MrSpasybo]

It's government I don't know if we can fight them and force them to remove mandotory KYC. Some exchanges like gate.io also use AML as their legal defensive to froze customers funds. that's the way how they scam people unlike what happen to someone on Binance If I remember correctly, someone's account was frozen due to depositing funds from a casino, he was refunded and the funds were returned to the sender's address.

The government's desire to control people makes me believe that this is a problem that will never be solved(loophole).

I believe the government has valid reasons to increase oversight of the crypto market due to its rapid growth and the significant number of investors experiencing losses. Additionally, the government's obligation to combat money laundering as per international regulations has led to strict policies for CEXs, resulting in mandatory KYC procedures for all users.

KYC has arguably become an integral part of the market since it was required for ICO investors in 2017. We've had to accept it in order to utilize the convenient services offered by CEXs. While DeFi presents an alternative, it cannot fully meet all user needs in the short term, making CEXs the primary choice for investors looking to enter the crypto market.

[electronicash]

this is where the big and well known exchanges turns bigger because the small ones are not trustworthy despite complying to them, it only appears they have decided already to scam and submitting KYC is somewhat just revealing the identify to a bad actor.

there is no other way to prevent this from happening than following the advice of the users who re familiar with the game which is to just trade on bigger exchanges.

[Cryptsafe]

It's government I don't know if we can fight them and force them to remove mandotory KYC. Some exchanges like gate.io also use AML as their legal defensive to froze customers funds. that's the way how they scam people unlike what happen to someone on Binance If I remember correctly, someone's account was frozen due to depositing funds from a casino, he was refunded and the funds were returned to the sender's address.

The government's desire to control people makes me believe that this is a problem that will never be solved(loophole).

I believe the government has valid reasons to increase oversight of the crypto market due to its rapid growth and the significant number of investors experiencing losses. Additionally, the government's obligation to combat money laundering as per international regulations has led to strict policies for CEXs, resulting in mandatory KYC procedures for all users.

KYC has arguably become an integral part of the market since it was required for ICO investors in 2017. We've had to accept it in order to utilize the convenient services offered by CEXs. While DeFi presents an alternative, it cannot fully meet all user needs in the short term, making CEXs the primary choice for investors looking to enter the crypto market.

I will agree with you here that the government is taking KYC very serious as to curb away irregularities and other heinous activities by unscrupulous elements who want to take advantage of the system to bypass the laws of the land. As a result of these  happenings, KYC became mandatory for CEX which they could not be able to avoid so they could still be in the business as their profit is more important to them. As it is now, there is no third party exchange that has  NO KYC policy, virtually all of them do in accordance to the jurisdiction they find themselves in and I believe it is helping them stay abreast of financial activities so they could easily track records and keep watch over transactions.

[bitmover]

How can we even fight against this practice, aside from avoiding such services, what if it happens, like in the case mentioned above? Is it realistic to form some kind of association that would protect crypto users, perhaps even have legal representatives in the most common countries?

I think we already do some this as a community

BTT and Altcoinstalks now are a great community support. We point out scams and flag bad services. I see no reason why someone would use changeswap, with so many better options such as Exch.cx (the best swap imo).

Sadly, people are misinformed and they keep using services...

[sampoerna]

Like it or not, yes, KYC always has pros and cons, and in crypto spaces, KYP is always the enemy of what is expected in crypto, namely privacy and anonymity. especially in CEX, which some require KYC, it becomes very annoying, but cannot be rejected and does a lot if you still use the service or exchange or platform.

Because this is an identity issue and of course no one can guarantee that the identity we input, especially with the photo, will be safe or not, whether later there will be identity theft or hacking or not. This is the concern of identity owners who do KYC.

But what else can we do. Unless it's a new project that we also have to KYC, I think I would really think twice and probably not do it, because it would be much more risky to trust our identity to a new platform or project that is not yet reputable.

And related to this case, hmm we can only decide to stay to do KYC or not, with its own pluses and minuses. And make sure that it is really worth it and safe enough or not for KYC, if it is really doubtful, it is better to let it go and leave it.

[pieppiep]

Like it or not, yes, KYC always has pros and cons, and in crypto spaces, KYP is always the enemy of what is expected in crypto, namely privacy and anonymity. especially in CEX, which some require KYC, it becomes very annoying, but cannot be rejected and does a lot if you still use the service or exchange or platform.

Because this is an identity issue and of course no one can guarantee that the identity we input, especially with the photo, will be safe or not, whether later there will be identity theft or hacking or not. This is the concern of identity owners who do KYC.

But what else can we do. Unless it's a new project that we also have to KYC, I think I would really think twice and probably not do it, because it would be much more risky to trust our identity to a new platform or project that is not yet reputable.

And related to this case, hmm we can only decide to stay to do KYC or not, with its own pluses and minuses. And make sure that it is really worth it and safe enough or not for KYC, if it is really doubtful, it is better to let it go and leave it.

Well, That is why it is hardly possible to solve the problem of the protection of the identity and the provision of the KYC procedures Legitimate concerns about personal data protection will not allow for easy storage and processing of such data. Instead, I think the best course of action remains to do your due diligence to ensure that you don’t trust your data with any of these platforms. There are a number of things you should consider especially where choosing a reliable service provider, some of which include; Reputation, Privacy policy and Security. You can also use another non-custodial wallet or DEX that doesn’t prompt the need to do KYC, so you can still engage in trading without compromise of your privacy. The bottom line is always emerge safe, whenever you start to feel uncertain or the risk is too high, you should bow out of the project.

[bayu7adi]

How can we even fight against this practice, aside from avoiding such services, what if it happens, like in the case mentioned above? Is it realistic to form some kind of association that would protect crypto users, perhaps even have legal representatives in the most common countries?

I am sure that some people when they want to put their money in trust with others, they will do research first, including from the legality of the platform or company that controls the money we have... from some of the exchanges you mentioned above, the main problem may be legality, so there is no supervision from the local government agency that routinely audits its services... this may be a loophole for service providers (exchange) to do these fraudulent things...

As users, we can only mark the exchange related to open reports or complaints on social media to rely on the virality of the phenomenon... unfortunately, not all users are present in related forums or discussions, so new victims continue to come...

What I have done since long ago is, always use the exchange with the best reputation and if that is not possible, I always rely on the local exchange in my country.

[owe_addams]

Maybe you should try another service? changenow is not the one

[bitmover]

Maybe you should try another service? changenow is not the one

And what about the user who lost his funds? His funds were taken hostage until he finishes endless kyc...

Certainly everyone should use other service and change now should be blacklisted, but there should be some way to those bad services. This is what this topic is about.