Crowdsale KYC is Fueling a Black Market for Fake ID

KYC for Crowdsales is Fueling a Black Market for Fake IDs

KYC for crowdsales was meant to add oversight and legitimacy to a largely unregulated space. Instead it’s left investors susceptible to data breaches, identity theft and blackmail. Given the hazards, it’s understandable that some ICO investors have resorted to buying fake ID.

Also read: A BCH Fueled Version of Patreon is Coming This August

KYC Has Created a Thriving Black Market for Fake IDs

Buying fake ID is a rite of passage for teenagers desiring to be sold alcohol. But a new market for fake ID has sprung up on the web, whose buyers crave nothing more illicit than admittance to the latest crowdsale. Know Your Customer (KYC) requirements, which are now widespread, were designed to screen out US and Chinese investors, and to dispel the notion that ICOs are unregulated. But rather than bolstering the industry’s reputation, they’ve created an unholy mess.

KYC for Crowdsales is Fueling a Black Market for Fake IDs
A typical Telegram message offering fake ID

Dedicated Telegram channels specialize in the buying and selling of fake IDs, complete with all the tools an investor needs to pass crowdsale KYC: passport scan, selfie, scanned bank statement; the works. Usually sourced from Russia, these can be bought for as little $50 – and it’s not just Americans and Chinese who are buying them. Investors who reside in countries that permit ICOs have also been snapping up fake IDs as a means of protecting their own identity.

Blackmail, Data Loss and Doxxing

With 80% of this year’s ICOs trading below their public sale price, investing in crowdsales is a risky businesses. Throw in mandatory KYC, and those risks are significantly heightened. A number of projects have been compromised through the hacking of the third party handling their KYC, while others have had their mailing list leaked. In each instance, investors have been susceptible to being doxxed, and there have been reports of blackmail.

KYC for Crowdsales is Fueling a Black Market for Fake IDs

Once hackers have obtained the email addresses of investors, they will either attempt to socially engineer them; sell the addresses on the black market; or claim to have filmed the victim watching online porn, threatening to send the video to their friends and family if they don’t pay a ransom. Given these hazards, purchasing a fake ID to pass KYC seems like the lesser of two evils. Tezos forcing KYC on its community one year after they’d invested, essentially holding their tokens to ransom, has further fueled the demand for fake IDs.

Most cryptocurrency investors accept, albeit reluctantly, that KYC is a requisite for trading on centralized exchanges. The case for forcing KYC on crowdsales is harder to justify. Given the hassle and hazards involved, it’s no wonder many investors prefer to wait and pick up tokens on IDEX, where there’s no verification and coins can often be bought at half the price.

Do you think KYC makes crowdsales safer or riskier? Let us know in the comments section below.


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Withdrawals Delayed – Bitflyer Scanning for Yakuza Customers

Withdrawals Delayed - Bitflyer Scanning for Yakuza Customers

Bitflyer has been delaying deposits and withdrawals of virtual currency in the midst of ongoing KYC verifications. The company received business improvement orders from the Japanese financial watchdog in June as a result of insufficient measures against money laundering. Bitflyer reportedly has delayed resuming business as it is thoroughly verifying its clients’ identities. Bitflyer also has stopped taking new customers last month, and this might go on for a while due to a lack of manpower, Nikkei reported.

Also read: Japan Penalizes Crypto Exchanges – Yakuza Involvement Confirmed

In virtual currency trading, deposits and withdrawals are said to be the main stage of money laundering. According to the Financial Services Agency, the company neglected to confirm the identities of their users, which lead to allowing the anti-social forces or members of the Japanese mafia to trade crypto. For this reason, the company is now reassessing the list of its customers, and all deposits and withdrawals are being currently scanned.

Japan’s Yakuza Are Laundering Crime Money via Crypto Exchanges

Withdrawals Delayed - Bitflyer Scanning for Yakuza Customers
30 billion yen was laundered through various overseas exchanges since 2016.

According to a customer, despite requesting withdrawal on June 25, he was not able to confirm the transaction by the morning of July 2.

Last May, the Mainichi newspaper revealed that some divisions of Japan’s organized crime syndicates, also commonly known as the yakuza, were using crypto exchanges to launder money. The Japanese mafia allegedly transferred more than $270 million of their funds overseas, according to the Mainichi.

“We strongly recommended [the six Japanese cryptocurrency exchanges] to remove all ties with anti-social forces,” the FSA told news.Bitcoin.com.

As the cryptocurrency industry is growing in Japan, the FSA pointed out the necessity for crypto exchanges together with the local authorities to create a increasingly secure environment with proper monitoring systems in place, including screening users’ ID.

Although Japan is historically known for its police force collaboration with the local mafia, also known as the yakuza, recent organized crime exclusionary laws that came into effect in 2011 criminalize individuals or companies who use them to facilitate their business affairs. The authorities send a warning just like the FSA did on June 22, but when persisting in doing business with the yakuza, one may have their name released to the public, be fined, or imprisoned.

What do you think would happen if Bitflyer failed to verify their customers’ mafia involvement? Let us know in the comments section below.


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Tezos Will Fork Before It’s Even Launched

Tezos Will Fork Before It’s Even Launched

Tezos, a blockchain best known for its off-chain drama rather than its on-chain utility, is set to fork. Internecine conflict has riven the Tezos community for months, spilling over into the courtroom and leading to the dismissal of foundation members. On the eve of its mainnet launch, another twist will see nTezos created as a spin-off. In the process, it will make Tezos the first blockchain to have been forked before it’s launched.

Also read: Number of Japanese Bitcoin Spenders Slowly but Steadily Increasing Says Bic Camera

And Then There Were Two

For armchair addicts, the cryptocurrency space is never short of popcorn moments, ranging from ICO scams to in-fighting, FUD, FOMO, and all the other acronyms for which the sector is renowned. Tezos its very own soap opera however, a twilight zone in which every week offers something macabre or unexpected. The news that Tezos looks likely to fork before it has so much as launched isn’t entirely unexpected, but it’s certainly an odd turn of events.

Tezos Will Fork Before It’s Even Launched

There are many reasons that could have triggered an acrimonious fork of the Tezos code, splitting the project in two, but in the end it appears to have been the enforced KYC that was the final straw. nTezos, should it launch as promised, will share the same open source code as Tezos minus the KYC and without the founders’ rewards. It will also come with an auditable genesis block and will not be affiliated with the controversial Tezos foundation.

This means that Tezos token-holders will have a choice of blockchains to adopt straight out the gate – or they can simply hedge their bets and claim their tokens on both chains. For token-holders to preserve their anonymity, however, they will presumably have to refrain from claiming their tokens on the parent chain, whose enforced KYC will leave them easily identifiable on the nTezos chain.

Tezos Will Fork Before It’s Even Launched
The nTezos Twitter account

KYC Is So 2018

Back in the summer of 2017, when ICOs could do no wrong, KYC was optional. Many crowdsales didn’t bother with it and Tezos was one of them. A lot has happened since then and in an email sent out on Sunday, the project explained:

We value and respect the privacy of our contributors, and along with countless others around the world, we personally oppose the unnecessary collection of personal information that has become pervasive on the Internet. However, it is important to comply with a rapidly evolving regulatory landscape. To that end, performing a KYC/AML check — as has become the norm for blockchain projects — is the best way forward.

Without completing KYC, investors can’t claim their tokens. Given that this stipulation wasn’t in place at the time of the ICO one year ago, participants are understandably irked. And it’s not just investors who are frustrated by this development – so is Tezos founder Arthur Breitman. On the Tezos Reddit page, Breitman, under the username “murbard” wrote that KYC was “not my call”.

Paying Penance for the Sins of the Past

In its understandable desperation to launch, Tezos has been trying its utmost to atone for the sins of the past. Around the time of its ICO, the Breitmans – Arthur and Kathleen – naively thought there would be no repercussions for admitting US investors, and famously referred to crowdsale investments as “donations”.  In fairness to the pair, the entire ICO space was then working under the assumption that tokens were unlikely to be classified as securities, but a spate of SEC pronouncements and subpoenas has put paid to that.

Tezos Will Fork Before It’s Even Launched

It’s too early to tell whether nTezos, the KYC-less clone, will gain traction, or even go on to become the dominant chain. What is certain is that a fully KYC’d Tezos is a blockchain that will struggle to gain new adherents wooed by cryptocurrency’s promise of privacy and economic freedom. All investors ever wanted was a quick flip of some tezzies for more bitcoin. Instead they got KYC, courtroom battles and tote bags.

Tezos Will Fork Before It’s Even Launched

Do you think nTezos will launch and if so is it likely to gain support? Let us know in the comments section below.


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Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto Schemes

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto Schemes

A major South Korean exchange, Upbit, has paid six people for reporting fraudulent crypto-related schemes. Ten cases were reported to the exchange and six of them were selected. Upbit also recently partnered with Thomson Reuters to operate a system to support transparent crypto transactions.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Upbit Paid Users for Reporting Fraud

One of South Korea’s largest cryptocurrency exchanges, the Kakao Corp-backed Upbit, has paid six individuals for reporting fraudulent crypto-related schemes.

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto SchemesThe exchange implemented a bounty system in March to reward users for identifying fraudulent schemes related to cryptocurrencies. The system is focused on identifying multi-level, illegal scams posing as cryptocurrencies or initial coin offering (ICO) tokens. “To the original complainant, Upbit pays a reward of 1 million won [~USD$931],” the exchange’s operator Dunamu Inc announced at the time.

Upbit said last week:

Since the implementation of the system, a total of 10 cases have been received and 6 of them have been selected. On June 6, we sent a reward of KRW 1 million with appreciation to the applicants.

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto Schemes
Lee Seok-woo, the representative of Dunamu Inc (middle), and four out of the six winners.

“We provide reward money to users who have reported fraudulent acts that impersonate [an] ICO to the investigating agency (police, prosecutors) and submit the necessary evidence documents to prove the declaration,” the exchange clarified. While Upbit indicated that proper reporting procedures were not followed “such as the lack of evidence of investigation agency reports,” it decided to pay out regardless, to reward users for participating in the system and “to create a sound cryptocurrency ecosystem.”

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto SchemesThe Kakao Corp-backed Upbit used to command the number one spot in the South Korean market in terms of overall trading volume. However, at the time of this writing, Upbit is the world’s eighth largest crypto exchange with a 24-hour trading volume of $201,594,215, according to Coinmaketcap. It is the second largest exchange in South Korea, after allowing Bithumb to retake the number one spot with $239,054,683 of trading volume over the same time period. Last month, news.Bitcoin.com wrote about the Korean authorities launching an investigation into Upbit.

World-Check in Partnership with Thomson Reuters

In addition to the aforementioned fraud notification system, Upbit has also recently created a system called World-Check. The system is part of a collaboration with Thomson Reuters, a multinational mass media and information firm.

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto Schemes

The system is meant to support transparent cryptocurrency transactions and strengthen the company’s KYC (Know-Your-Customer) program. It aims to be “the trusted and accurate source of risk intelligence made available to help you meet your regulatory obligations, make informed decisions, and help prevent your business from inadvertently being used to launder the proceeds of crime or association with corrupt business practices,” the company described.

Korean Exchange Upbit Paid Six People for Reporting Fraudulent Crypto SchemesWhen a user joins Upbit, their membership information is checked against the World Check data. If the security risk is determined to be high in relation to crime and terrorism, the registration process is immediately terminated. The system also checks daily for criminal records of members against the World-Check database. The company believes that this will help prevent money laundering and terrorism financing activities using cryptocurrencies.

In an unrelated event, a small South Korean crypto exchange, Coinrail, claimed it was hacked over the weekend. The police are now investigating the case.

What do you think of Upbit paying users for reporting fraudulent crypto schemes? Let us know in the comments section below.


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Another US Bitcoin Trader Faces Prison for Illegal Money Transmission

Another US Bitcoin Trader Faces Prison for Illegal Money Transmission

This week in Southern California a Los Angeles woman who called herself the ‘Bitcoin Maven’ will be sentenced this Monday after pleading guilty for illegal money transmission. According to law enforcement, the woman made close to $300,000 USD annually by selling BTC on the peer-to-peer exchange Localbitcoins.  

Also read: Bitcoin Cash Innovation Continues with the First On-Chain Atomic Bet

LA Woman Called the ‘Bitcoin Maven’ Convicted for Selling Bitcoins Without a License

U.S. law enforcement has arrested and convicted another Localbitcoins seller who reportedly made $300K per year selling digital assets. The 50-year-old Theresa Tetley used the alias ‘Bitcoin Maven’ and sold bitcoins without registering with the financial authorities. Prosecutors say Tetley’s operations “fueled a black-market financial system in the Central District of California that purposely and deliberately existed outside of the regulated bank industry.”

The U.S. Attorney’s Office claims that Tetley processed around $6-9.5 million USD worth of bitcoins throughout her tenure. Operating as the ‘Bitcoin Maven’ Tetley sold BTC between 2014 and 2017 using the online trading platform. Tetley has pleaded guilty and her defense is asking for 1 year in prison for her wrong doings but prosecutors have asked the U.S. District Judge Manuel Real to sentence Tetley to 30 months in federal prison.

Another US Bitcoin Trader Faces Prison for Illegal Money Transmission
Last year US law enforcement officials began arresting Localbitcoins traders who dealt with large amounts of BTC.

US Law Enforcement Continues to Arrest Localbitcoins Sellers for Selling Large Quantities of Digital Assets Without Permission

Tetley is one of many instances where US Localbitcoins traders have been taken into custody for illegal money transmission. In Missouri, a trader named Jason R. Klein pleaded guilty for trading BTC for fiat without registering with the financial authorities. Thomas Constanzo, (aka ‘Morpheus’) was arrested by Homeland Security in Arizona for the same crime. An Ohio man named Daniel Mercede was arrested in May of last year for selling large quantities of BTC overseas. Further, Richard Petix from New York was another trader who was found guilty for selling BTC and charged with “illegal money transmitting business” and “making false statements.”

Then this past February there was another instance where the U.S. Immigration and Customs Enforcement (ICE) team and Homeland Security arrested Morgan Rockcoons (aka ‘Morgan Rockwell’) in Las Vegas Nevada for a BTC transaction from November 2016. That month Rockcoons was charged with unlicensed money transmitting business and money laundering.

In Theresa Tetley’s (aka ‘Bitcoin Maven’) case, the U.S. Attorney’s Office is asking for a forfeiture of 40 BTC confiscated during her arrest, and 25 gold bars.

What do you think about the LA woman charged with illegal money transmission for selling BTC on the platform Localbitcoins? Let us know what you think about this subject in the comment section below.


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Indian Crypto Exchanges Engage with RBI to Offer Banking Ban Alternatives

Indian Crypto Exchanges Engage with RBI to Offer Banking Ban Alternatives

Indian cryptocurrency exchanges have followed the Supreme Court’s suggestion for them to present their cases to the Reserve Bank of India. They have sent letters to the central bank, offering alternatives to the RBI’s banking ban.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Supreme Court’s Suggestion

Cryptocurrency exchanges in India have reportedly sent their pleas to the Reserve Bank of India (RBI) as directed by the Supreme Court’s ruling last month.

Indian Crypto Exchanges Engage with RBI to Offer Banking Ban Alternatives
Indian Supreme Court.

The central bank mandated in April that all financial institutions under its control must stop servicing cryptocurrency exchanges and other crypto-related businesses within three months. Some crypto exchanges subsequently took the RBI to court; their writ petitions were passed to the Supreme Court.

The country’s top court decided to hear all the petitions against the RBI ban on July 20 and ordered concerned parties to engage with the central bank to consider their requests. The Supreme Court “allowed cryptocurrency exchanges, their shareholders, traders and other individuals to present their cases within two weeks to the RBI, which will look into the issue in accordance with the law,” as news.Bitcoin.com previously reported. Quartz elaborated:

The supreme court suggested that these exchanges can engage with the RBI. So, last week, a clutch of such firms sent out letters making their case against the banking regulator’s prohibitory order.

Crypto Firms’ Requests

Indian Crypto Exchanges Engage with RBI to Offer Banking Ban AlternativesVarious suggestions were presented to the RBI. According to the news outlet, some of “the bitcoin exchanges have requested the RBI to remove the blanket ban, saying the regulator should instead enforce it only on firms violating the norms.”

A petitioner explained to the publication, “we have also suggested measures that we are ready to take to improve the KYC-AML [Know Your Customer – Anti-Money Laundering] norms, such as including passport details as well. We are also ready to take any suggestion that the regulator has to offer that can address their concerns.”

Anirudh Rastogi, TRA Law’s managing partner who filed the supreme court petition representing four exchanges, told the news outlet:

A ban is counter-productive, therefore, we have suggested that there should be appropriate regulations that can address the government or the central bank’s concerns.

“Other firms have asked for an extension on the deadline,” the publication wrote, adding that it has reviewed an application submitted by Kali Digital Eco-systems Private Limited to the RBI. The document states that “considering the next date of the hearing in the supreme court is after July 06, 2018,” the firm requests the central bank “to extend the time of three months granted in the captioned circular to at least Aug. 31, 2018.”

Coping with RBI Ban

Five writ petitions have been filed, as news.Bitcoin.com previously reported. Last month, the Supreme Court mandated that no other courts shall accept any more crypto-related petitions and all existing ones were transferred to the Supreme Court.

Indian Crypto Exchanges Engage with RBI to Offer Banking Ban AlternativesIn anticipation of the RBI order taking effect, crypto exchanges in the country are increasingly moving away from fiat, creating crypto-to-crypto trading platforms. Unocoin launched a new trading platform with 15 cryptocurrencies last week. Zebpay and Koinex have both launched crypto-to-crypto exchanges.

Currently, the Indian government is working on the regulatory framework for cryptocurrencies. It has set up a committee under Subhash Garg, the secretary of economic affairs in the finance ministry, to prepare a draft crypto law.

Do you think the RBI will reconsider the ban and accommodate the requests of crypto exchanges? Let us know in the comments section below.


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Research: Majority of EU, US Exchanges and Wallets Fail to KYC Users

Research: Majority of EU, US Exchanges and Wallets Fail to KYC Users

More than two thirds of the leading cryptocurrency exchanges and wallet providers on both sides of the Atlantic fail to conduct proper identity verification checks. According to new research into their onboarding practices, most of the studied platforms do not meet the requirements of the upcoming regulations under the updated EU anti-money laundering directive.

Also read: Localbitcoins Updates ToS: ‘Some Situations May Require ID’

‘Crypto Identity Crisis’

The research, titled “The Cryptocurrency Identity Crisis: An Industry Scorecard for Digital ID Verification for KYC and AML”, looked into the onboarding practices of leading cryptocurrency exchanges and wallet providers in Europe and the US. Its main goal was to determine whether these prominent platforms implement proper Know Your Customer (KYC) procedures regarding new users. The study was conducted by P.A.ID Strategies and commissioned by Mitek, a provider of digital identity verification solutions.

The results show that 68% of 25 examined crypto exchanges and custodian wallets allow users to trade crypto and fiat currencies without conducting formal identification. These companies do not meet many of the requirements mandated by the upcoming EU regulations. They are not performing identity verification checks against official identity documents and lists of politically exposed persons. There is no sanctions screening or audit trail to trace criminal activity.

Research: Majority of EU, US Exchanges and Wallets Fail to KYC Users

The EU’s fifth anti-money laundering directive, AMLD5, is due to come into effect next year. It is expected to bring crypto-related services in line with the standards applied to other financial products such as those offered by banks. That includes mandatory identity checks on new customers like those conducted by traditional financial institutions.

The European Parliament adopted the European Commission’s proposal for a Fifth Anti-Money Laundering Directive on April 19 this year. The document aims to prevent money laundering and terrorism financing through the financial system of the European Union. It was proposed by the Commission in 2016, even before AMLD4 was implemented by all member-states. The updated directive introduces stricter requirements for customer due diligence procedures and identity verification.

Exchanges and Wallets Ranked

Research: Majority of EU, US Exchanges and Wallets Fail to KYC UsersUnder the new rules, cryptocurrency exchanges and wallet providers will be obliged to apply for registration. The platforms in the study have been ranked according to how compliant their onboarding process is with the AMLD5 provisions.

Topping the list are exchanges like Coinbase, Gemini, Poloniex, and Itbit. All these require users to present official ID documents to begin trading. They have received an “ID Verification Score” of 9 out of 10. Platforms like Kraken, Bitstamp, Wirex, Local Bitcoins, Bitpanda, and Bitwala are also included in the survey.

A verified email address and a mobile phone number are often enough to sign up for the exchanges and wallets that do not have KYC procedures. The researchers note that both are easily obtainable without identification. Users can start trading with any email address and a number from a prepaid cell phone service.

“Cryptocurrency wallets and exchanges want to enjoy the same trust as the wider traditional financial services,” said John Devlin, Principal Analyst at P.A.ID Strategies, quoted by Real Wire. “Meeting regulatory demands ahead of AMLD5 coming into force could go a long way to changing this sector’s reputation as being something of a ‘wild west’,” he added.

Mitek COO Kalle Marsal believes that crypto exchanges and wallet providers want to change the “perceptions of lawlessness,” which in his words is a relatively straightforward fix. “Identity verification processes can be, if implemented correctly, simple for the customer and no barrier to signing up,” he argued.

Do you expect exchanges and wallets to comply with the stricter EU regulations? Share your thoughts on the subject in the comments section below.


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Cryptocurrency Exchange Hitbtc Suspends Services in Japan

Cryptocurrency Exchange Hitbtc Suspends Services in Japan

Hitbtc has suspended its services for Japanese residents to avoid any trouble with the country’s financial regulator since it is not authorized to operate in Japan. Users with Japanese IP addresses will be asked to provide their residency information within the exchange’s know-your-customer (KYC) procedure to prove they are not residents of Japan.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Suspending Services in Japan

Cryptocurrency Exchange Hitbtc Suspends Services in JapanHitbtc, the world’s eighth largest crypto exchange according to Coinmarketcap, has announced a service suspension for Japanese residents.

On its website, the Hong Kong-based exchange added a new section called Service Restriction to the Legal Information page of its Terms of Service. “You shall not use our services and immediately cease using those if you are a resident or become a resident at any time of the state or region where Hitbtc is not authorized to act,” the exchange wrote, adding:

For the avoidance of any doubt and in accordance with the Japan Payment Services Act, Hitbtc has temporarily suspended providing virtual (crypto) currency exchange services to residents of Japan.

Cryptocurrency Exchange Hitbtc Suspends Services in JapanThe exchange elaborated, “In case our technology detects that you use our services from an IP address registered in Japan, or any other services registered in Japan, you would be asked to confirm that you are not a resident of Japan by providing information on your residency within KYC procedure.”

The exchange subsequently posted a notice on its website on Sunday confirming the suspension, reiterating that it “will apply only to those living in the country.”

Hit Solution Ltd provides access to crypto assets exchange platform under the registered trademark Hitbtc. Since 2013, the platform “has been providing markets for bitcoin, ethereum, litecoin, dogecoin, monero, USDT, and more than 300 cryptocurrencies in total,” its website details. The exchange’s 24-hour trading volume at the time of this writing is $281,395,577.

Avoiding Trouble with the Regulator

The Japanese Payment Services Act that Hitbtc refers to went into effect in April last year, legalizing cryptocurrency as a means of payments.

Cryptocurrency Exchange Hitbtc Suspends Services in JapanHowever, it also mandates any crypto exchanges operating in the country to register with the country’s financial authority, the Financial Services Agency (FSA). So far, 16 crypto exchanges have been granted a license to operate and the same number were allowed to operate while their applications are pending. Out of the latter 16, the FSA recently revealed that 8 have indicated that they are withdrawing their applications.

The agency has also warned some exchanges that have been operating in Japan without a license. Among them was Binance, the exchange whose 24-hour trading volume often tops the list of the world’s largest. On May 23, the agency sent a letter to Binance and its representative, CEO Changpeng Zhao, warning them about operating in Japan without a license. In April, crypto exchange Kraken announced its withdrawal from the Japanese market, citing high costs to comply with the FSA rules, which became stricter following the hack of Coincheck in January.

In Sunday’s announcement, Hitbtc revealed that it has been working with a Japanese law firm with the aim “to get Hitbtc through the local subsidiary setup and licensing procedure to resume its services” for Japanese residents, adding:

The company is actively hiring for the local office and exploring M&A opportunities to expedite the launch of the Japanese operations in Q3 2018.

What do you think of Hitbtc’s strategy in Japan? Let us know in the comments section below.


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Cryptocurrency Exchange Verification Is Getting Weird

Cryptocurrency Exchange Logins Are Getting Weird

Back in the day, before cryptocurrency was worth anything, an email address and a password was all you needed to login to an exchange. Then came 2FA, using email verification or Google Authenticator. Then came the third generation of secure sign-in methods, and that’s when things started getting weird.

Also read: Darknet Market Rapture Has Been Down for a Week — Users Grow Leery

From Fit the Puzzle to Make the Gesture

Cryptocurrency Exchange Logins Are Getting WeirdAs attackers have gotten more sophisticated, so have the measures cryptocurrency exchanges have taken to keep them at bay. These are designed to fulfill a range of objectives, including spam and bot deterrence, as well as to perform increased due diligence for legal reasons.

Binance with its “Fit the puzzle piece carefully” which has spawned numerous memes, and kept its customer support busy attending to users who can’t fit the puzzle. Kucoin, meanwhile, began asking odd questions of its customers a few weeks ago, and then repeating those questions every time they went to login, much to their annoyance.

Cryptocurrency Exchange Verification Is Getting Weird
Kucoin asks the important questions

Bittrex will force you to log in twice after clicking a link in your email, stating that it doesn’t recognize your IP – even when you’re signing in from your usual location on your usual device. The quirks of logging into major exchanges have been assimilated into cryptocurrency culture, and while users may grumble, they accept that these measures are in place for their own benefit. Gate.io’s latest verification trick, though, has gotten traders talking:

Cryptocurrency Exchange Logins Are Getting Weird
Gate.io’s new KYC

Prove You’re Human

Completing KYC for Gate.io in a public place is no longer viable, but perhaps that’s part of the plan: to embarrass users into upping their opsec by logging in at home. As part of the verification process, users are required to recreate four out of a possible nine gestures before their webcam. From a security perspective, it’s certainly effective: bots have yet to master human gestures while pulling gang signs.

In no other industry would the public tolerate such bizarre security measures. Cryptocurrency is different though. Undergoing unorthodox procedures is the price that must be paid for trading on an exchange. Traders can complain, but if they want to withdraw their funds, they have no option other than to comply.

Do you think enhanced verification measures heighten exchange security, or do they simply inconvenience users? Let us know in the comments section below.


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