Getting authorized to deal on an exchange is a time-consuming task for law-abiding virtual currency consumers. They are required to divulge a great deal of personal information, such as their personal addresses, copies of government-issued identification, and a picture or video shot of their face.
It’s simpler for fraudsters. On the illegal market, they may get a ready-to-use, private account in somebody else’s identity for as low as $150 at Coinbase Pro, Binance US, Kraken, or a variety of other cryptocurrency exchanges.
In this case, “verified” does not imply “genuine.” Illegal vendors make accounts using other people’s data or phony aliases in order to deceive platforms into authenticating them as legitimate users.
Fraudulent profiles are not restricted to crypto exchanges. Conventional marketplaces and exchanges are also manipulated to give away false identities. Some of the most common victims are users of mainstream payment solutions like Transferwise, or Square’s Cash App.
As an investigation by CoinDesk revealed, there is an entire industry working on providing these fake aliases. These are not a mere group of fraudsters and scammers. The industry has a structure like any other and often works in hierarchies of managers, staff, and teams. According to an anonymous source, these firms individually forge at least 1500-2000 identities every month.
Illegal activities have plagued the crypto space since its very beginning. Anonymity-focused tokens like Monero are at the top when it comes to being used for illegal activities. To combat these issues, many governments are trying to impose strict regulations on cryptocurrency transactions.