Crypto Scammers Use ‘Professional KYC Actors’ to Avoid Capture

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Crypto scammers and hackers may have found a new, easy way to avoid getting caught. CertiK, a blockchain security expert, unveiled a group of KYC actors for hire that rogue developers can use to scam crypto communities.

Over the years, scammers have had to become more creative to avoid detection. Many illicit activities have evolved, from giveaway crypto scams to romance/online dating scams. 

The Better Business Bureau (BBB) Scam Tracker showed that cryptocurrency scams rose from the seventh riskiest type of fraud in 2020 to the second most dangerous in 2021.

Seeing such illicit activities, many crypto exchanges such as Binance and Coinbase to other crypto-related platforms mandated Know-Your-Customer (KYC) measures. But it looks like scammers have also found a way around this. 

KYC actors playing for the bad guys

Blockchain security company CertiK has raised red flags over “professional KYC actors” used by developers to bypass regular verifications.

In this scheme, a KYC actor is hired explicitly to KYC on behalf of rogue project owners looking to gain trust in the crypto community before an insider hack or an exit scam.

As per the firm, it is easy and cheap to hire someone to ‘KYC for a fraudulent endeavor.’ Prices can go as low as $8 given the requirements, such as passing the KYC requirements ‘to open a bank or exchange account from a developing country.’

CertiK further added:

“The price increases if the KYC actor has to face a more complex verification process and jumps significantly if the buyer needs an actor who is a national resident of a country that is considered low-risk for money laundering, thus having a lower probability of being flagged or rejected, as well as access to a lot more services.” 

Overall the company’s analysts were able to pinpoint over 20 over-the-counter (OTC) underground markets, most of them hosted on Telegram and Discord, as well as some low-requirement phone-based apps.

CertiK urged users or potential investors to maintain caution when dealing with crypto projects. One should conduct a proper, thorough background investigation on each key member. Even collaborating with a team of professional, experienced criminal investigators and intelligence analysts is recommended.

Crypto scammers aiming bigger

A primary investigation could help, given the hike in illicit activities within the crypto industry. 

Over the last few years, crypto scams have surged, given the rise in cryptocurrencies. Previously, CertiK reported that hackers stole over $2 billion in crypto assets in H1 of 2022 and expects losses in this category to increase by 223% from 2021.

Such developments could curb further innovation within the crypto industry. Meanwhile, regulators continue to debate ways to potentially regulate and protect investors. 

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