2 November 2024
Crypto Exchanges Out There Have Weak Or NO KYC
The study of CipherTrace reveals that more than half of all exchanges worldwide have weak KYC identification protocols — with exchanges in Europe, the U.S., and the U.K. among the worst offenders.
CipherTrace studied a total of 800 crypto exchanges including decentralized, centralized, and automated market maker exchanges. The study showed that 56% of them did not follow KYC guidelines at all despite anti-money laundering (AML) regulations. A huge number of such crypto exchanges are found in Europe- a region known for stricter regulations. 60 percent of European Virtual Asset Service Providers have deficient KYC practices.
Three countries, the UK, the US, and Russia have the highest number of crypto exchanges with weak KYC.
Some of the exchanges have not mentioned the country of origin on their website or terms and conditions. 85 percent of these exchanges have weak KYC framework. This indicates that some exchanges are hiding their jurisdictions to avoid having to register or comply with AML regulation.
The report discloses that 70% of exchanges in Seychelles have poor regulations which make the island country a ground for money launderers.
The report also shows 21 DEXs have 81% weak or not practices of KYC. However, DEXs aren’t necessarily good venues for money laundering. The study of CipherTrace states that even though $7.9 million of crypto stolen in the KuCoin hack was sold on decentralized exchange Uniswap, it wasn’t laundered there.
Talking about DeFi projects, they are traditional financial activities offering lending, borrowing, earning interest which means they could fall under the same regulatory framework as the banks and other regulated financial institutions.
Discussion
0 comments