Bitcoin Forum

Hello guys.
I'm very very far from making some kind of cash-out, but i was just wondering... How do you handle the thing of being forced to give your personal informations to exchanges to be able to convert your cryptos in fiat and transfer them on bank?
For how i see it there it's a very high possibility (if not certainty) that exchanges are selling the informations given by their costumers... and anyway there is alway the risk that they get hacked.

Knowing this, why you handled your ID and documents to exchanges? making some money it's enought to compesate the risks for you? do you use some alternative way to cash out your crypto?

For me, giving bank coordinates should be enough to allow people to cash out... The worst that can happen in that way is having your bank account hacked, but in these cases the banks give some warranties and some kind of protection/indemnity...
I don't see the necessity to provide an exchange with photos, ID, bills etc...

What do you think? do you think this system will change in the near future? what alternatives do you have?

The necessity stems from the regulatory requirement that they be and stay KYC/AML compliant. Banks want assurance that the source of funds being wired to them are from legitimate sources and are not being laundered. And because cryptos can come from anyone anywhere (even criminals) then an exchange's non-compliance potentially makes them a conduit or a tool to launder funds. When you convert the coins to fiat, then instruct the exchange to wire that money to your account, the money is given a legit facade. The missing link is where the coins come from which is why regulators want exchanges to positively identify people trading on their site.

The ID and utility bills story is the sensitive part. I would give mine to a licensed and regulated exchange (Bitstamp, Coinbase, Kraken..) but not to one of those fly-by-night exchanges. Do your due diligence too. Don't give your documents to anyone or anything which has no track record of operational accountability and also to those which do not operate in jurisdictions that have solid and established data protection laws.

What make them licensed and regulated? they pay taxes? are they controlled like banks? how can we know that tomorrow bistamp will not disappear and sell all the info they have to some criminal or some kind of private organizations?
I agree it's not smart to handle your info to some shady or new exchange, but at some point you must choose one to cash out with.

At date, to which exchange would you handle the required info to cash-out? which one has enough regulation to be considered reliable at least as a bank? which one raises in you enough trust to make you know they will not use your personal info? or that at least they cannot disappear escaping from the law?

(lot of question i know and i'm sorry, just trying to understand)

I do feel uncomfortable with handing over my ID with exchanges, which is why I don't really like exchanges which force you to verify yourself that much. However, sometimes it's the regulation of the countries. And yes, some of the big exchanges are indeed licensed exchanges in a country. So they'll have to follow the rules.

If you aren't comfortable either, then just don't use exchanges or even get a friend to do it.

If you're wiling to trade a 3-5% reduction in fiat payment for your privacy, then you can certainly find a lot of buyers on localbitcoins willing to take your bitcoins for that kind of price as well.

I don't agree to all those mandatory requirement of sending documents and identification but there is just no other way for me to cash out from the tokens I have but to follow their rules and if they say there is the need for me to upload my drivers license then I guess I would do so as I don't also want to risk myself getting involve in exchanges with a user from localbitcoin.

AFAIK, exchanges will actually try to bypass verification as far as possible and allowed. Because they know that they'll get a much larger following and user base by doing that instead of requiring strict identification.

The government is who is requiring these documents. Exchanges are only acting on behalf of the gov's interest.

I don't see the need in providing ID to exchanges either, but for one reason or another, the government/exchange wants the exchanges to know who's doing the exchanges before anything can be withdrawn from the exchange. You can avoid this via p2p trading platforms, as others have said such as LBC/paxful.

In my opinion only the less legitimate exchanges (Bitfinex, CEX and similar exchanges) will try
to bypass verification as far as possible.

The licensed and regulated exchanges are actually pretty eager to conform to the expectations
of the regulatory bodies. E.g. exchanges like Bitstamp take KYC pretty seriously as anyone, who ever
had to fill out one of their KYC forms can confirm.

Besides, some exchanges are even acting in advance of passed legislation:
Japanese Crypto Exchanges Unite to Form Self-Regulatory Group (https://bitcointalk.org/index.php?topic=2988384.0)

I don't use exchanges.There are a few p2p services which help you exchange coins without having to verify anything.Identity risk is a big problem and anti-bitcoin.

Not sure about 'hackers' but certainly government organisations.That's why they take the details in the first place,to track users.

People are idiots.Most of the retards who sign up on exchanges are only there to earn money and don't give two shits about their privacy.

You have two choices here. Either you can cash out slowly - that means not going for full verification, but the lower tiers that only require a name and address and bank accounts, but which limits how much you can take out each month. Set up several of these types of accounts on several exchanges, and then patiently cash out over a period of months.

The second option is to sell in person, which is risky.

choose the most trustworthy exchanges who don't need to be selling their sensitive data to secure profit. I doubt the company like Coinbase would be selling stuff like this. Some leaks can always happen, almost impossible to prevent that.

The issue here is you are using their platform and when you do that you need to follow their rules, this is the same problem with banks we can complain all we want but if you have your money in a bank then you need to follow their guidelines, you only have two options, become a long term holder of your coins and wait until you can use them directly in your everyday life or use decentralized exchanges and then cash out to fiat using a p2p platform.

An important warning to those of us in the crypto space. Its funny, we're so protective of our Private Keys yet have no problem sending such sensitive documents across the internet for KYC/AML. Its Identity Theft waiting to happen and we as a community need to address the problem before hacks become commonplace. :) let's just be very careful...  Especially where we have loads of scam projects requesting for kyc.

This is just another reason to stick to the big and oldest exchanges, and avoid their newbies competitors. The same rules apply to some EMIs which only accept remote account opening. Better go out to the high street, and open an account at the bank which has the largest building. This is a XIX° century rule, but it's still valid today.

What about exchanges such as Binance, and poloniex/bittrex before they were pressured into adding KYC?

Exchanges have a significant benefit to gain if they do not implement KYC.

If they do implement KYC, it is either because of regulatory pressure that force them into doing so, or, they are most likely doing it with some malicious intent to hold customer funds with KYC being somewhat of an excuse. That's the two most likely reasons, no one wants to be compliant just for the sake of it.

Just look at previous cases with respect to HitBTC KYC, and the lengths that they ask you to answer questions at, that relevant legislation probably doesn't even cover.

Hitbtc is an exchange known to ask 1001 different questions, all an attempt to annoy people long enough so that they drop their account with the funds inside. It's horrible that people have to go through this, but they chose to register there and deposit funds, and that while Hitbtc has been a shitcoin exchange with tons of problems since the very beginning.

In most cases, people (luckily) hold very little funds in their account there, so the loss isn't all that significant, but if you have tens of thousands of people dropping their account with a few hundred $$ worth of funds in it, then it adds up to a solid amount after a while for Hitbtc.

Another thing is that due to their withdrawal problems, it might even be an exchange that operates a fractional reserve system. Horrible exchange this is.

I'm even surprised that this exchange is still breathing nowadays with their shitty service plus too high fees, I'm not expecting that there are still some certain
users who do engage with this one.Im really aware on Hitbtc issue and as you had described about those different questions, it always been part of the plan on where
to annoy people on complying the requirement until they got tired and leave the funds inside their account.What a very shady behavior of theirs.

HitBTC still exist because shit tokens can get listed there, and attract crazy speculators to buy them after they dumped to -1000x. Not really a good thing for the ecosystem, but at the same time it shows that the market is filled with ignorance and foolishness.

I believe they'll still exist for the next few years at least.

I only send my document to one exchange and it is a local exchange in my country, their company is transparent and very clear, so if anything happened with my document I believe they will take full responsibility for it. However I also use some other exchange to trade my coins, but all of them does not require KYC or any personal document, like Binance, CoinExchange, and STEX.
And basically I don't think it is possible to trade your crypto and exchange it to Fiat money without sending any personal document, you just need to pick the exchange you can trust.

Unfortunately it's not simply a case of them taking responsibility and saying "Yup, we got hacked, our fault". Once your documents are in the wrong hands, nothing the exchange can say or do will make the situation any better. You are still the one who is going to have to file police reports, freeze all your accounts, freeze your credit, manually monitor your credit, speak to your tax agency, etc, and still be at risk of receiving debt or criminal charges against you for things you didn't do.

Whether or not the exchange will take responsibility is irrelevant.

I would say the same thing too that exchange tending to have the responsibility out of those documentation is really totally irrelevant and
i cant see a reason for them to obliged themselves about the insurance of those gathered informations.Once you sent out any info to them then expect
that you are already risking it.

Very valid point. I have already submitted the scanned copy of my passport to at least a dozen crypto-exchanges and this is something that I am not very comfortable with. I think I may have to depend on the decentralized exchanges to trade by tokens.

A dozen?! Wow. Why do you even need an account on a dozen different exchanges, let alone need to go through KYC on all of them? You are trusting an awful lot of strangers and and awful lot of unknown security systems to keep your personal details safe. That seems ridiculous to me. If I were you, I would start by closing as many of those accounts as possible, and making it clear to the exchanges in question you wish for them to delete your details and copies of your documents. There is absolutely no guarantee they will, but I would at least try.

Well, if the exchange that is asking for KYC form fill up is well known, then there is a high chance your identity is safe. But you never know. Exchanges never fail to disappoint. They may be look all good from the front, but might be doing devious activity behind your back. Again, there is a chance they might get hacked like you said, and your identity documentation might get stolen.
If its not extreme necessity, then try to avoid those exchanges that look for KYC. Or just do face to face transactions.

If the exchanges are not to be trusted I think it will be hard for us to think that they actually deleted the documents. But I agree a dozen exchanges is ridiculous, given that you handed all of them your privacy. This seems to be a permanent problem for you if those exchanges are fraudulent.

I think OTC selling and buying is the way to go but escrow services are too expensive.

Yes... I was wrong with that decision. In the past, I used to participate in a lot of bounties. Here the problem is that these tokens are not listed in all the exchanges. At the most, they could be traded in 2 or 3 smaller platforms.

Its too late to start closing exchange accounts when you already submitted KYC documents, even if you close those accounts, I think they may have to keep your details there. That is also the problem of the bounty hunters like me, I have submitted to these exchanges as I have to send to them the tokens listed on them.

You don't have to send anything to anyone. Participating in bounties is your choice. No one is forcing you to, and certainly no one is forcing you do undergo KYC procedures. I would argue there there is no bounty campaign or any quantity of a useless token that is worth risking your identity for.

You are right. Now I am left with very few options. It would have been much better if the bounty payments were made in ETH or BTC. But then, who cares about the bounty hunters? They are just pawns with no power.

Exchange KYC is almost acceptable or even necesary in some cases be it buyer or seller, but shitcoin shittoken shitico things are a completly different deal, you get simple graphic designing for your money and data that it is after sold on a dark market.

However some exchanges don't requiere KYC for smaller amounts and there is ways to avoid this, try localbitcoins, it's somewhat better and is user2user through escrow.
I personaly try to avoid exchanges that requiere payment for listing.

It depends on the exchange if I will give my own identity to them. If it is Binance or Bittrex, I'll surely give my required personal information to comply with their requirements in opening an account. Since, I can recover my account much faster if it got hacked.

One has to be very careful while submitting the kyc documents to any exchanges or any ICO related stuff etc because if you are not sure who the team is how they will protect your documents better not to submit to the unknown ones .