Why KYC is extremely dangerous – and useless

[tyz]

Binance may be a very reliable site for exchanging there's no fear of being scammed albeit you are doing KYC here. Allows you to secure your own funds However, within the case of other sites got to work well verified.

Binance may have been a reliable exchange in the past, but Binance can be hacked just as any other exchange. Then your KYC data can fall into the wrong hands and be misused. Binance is constantly changing the location where it is "officially" based on to escape the regulatory authorities. For example, it states that it is based in Malta but in Feb 2020 Maltese authorities stated that it is not authorized to do crypto business in the country. There is therefore no data protection law to which they are subjected. It's naive to think that Binance is safe when it comes to KYC.

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[karagun125]

I think the only danger on submitting our kyc is that our identity would be rob by scammers and use it for their own activities on fraud works.

[Rengga Jati]

I think the only danger on submitting our kyc is that our identity would be rob by scammers and use it for their own activities on fraud works.

Indeed. And what you said basically already stated by OP and others above. Well, that's why we must be careful and never share private data like our identities. You should ever hear that our identities can be traded on the black market. It is a warning, thinking about the risks before submitting private data to any project teams.

[Tytanowy Janusz]

Of course, I would be happy to get a Polish translation. I've reserved it for you now:

Thanks. I'll let you know when it will be ready.

Binance may have been a reliable exchange in the past, but Binance can be hacked just as any other exchange.

Just like your bank, your police station, airport, tax office and every other entity that has ever stored your sensitive data. IMO binance security is on higher level than most of those including banks.

[Lucasgabd]

People move by incentives.
knowing that there are darkmarkets for KYC, documents and selfies I wouldn't be surprised it we had schemes of new exchanges giving 10 USD per KYC only to "flip" iton these markets and make some thousands or even million dollars (plus trading fees)

[tyz]

Binance may have been a reliable exchange in the past, but Binance can be hacked just as any other exchange.

Just like your bank, your police station, airport, tax office and every other entity that has ever stored your sensitive data. IMO binance security is on higher level than most of those including banks.

Well, that's true. But if my bank is hacked and money is stolen or they have violated data protection laws, then the bank must pay the compensation or can be sued. That is not the case with Binance. You don't even know where to turn for a legal action. Malta? China? Singapur? Hongkong? All the institutions you mentioned are subject to strict legislation.

[Lucasgabd]

Binance may have been a reliable exchange in the past, but Binance can be hacked just as any other exchange.

Just like your bank, your police station, airport, tax office and every other entity that has ever stored your sensitive data. IMO binance security is on higher level than most of those including banks.

Well, that's true. But if my bank is hacked and money is stolen or they have violated data protection laws, then the bank must pay the compensation or can be sued. That is not the case with Binance. You don't even know where to turn for a legal action. Malta? China? Singapur? Hongkong? All the institutions you mentioned are subject to strict legislation.

indeed, your bank would be more responsible by your funds in the case of a hack.

BUT it's worth to remember that binance and bitmex have their funds, (remember SAFU?) and have copensated users due to hacking loss in the past.

[Tytanowy Janusz]

Well, that's true. But if my bank is hacked and money is stolen or they have violated data protection laws, then the bank must pay the compensation or can be sued. That is not the case with Binance. You don't even know where to turn for a legal action. Malta? China? Singapur? Hongkong? All the institutions you mentioned are subject to strict legislation.

But we are talking about sensitive data hack. There is no compensate that bank can offer that will reverse your ID being actively traded on darknet (if they admit to being hacked at all).

Regarding binance. They have special #safu fund that collect 10% of trading fees in case there was a security issue to cover users loses. Their reputation is worth more than coins in their wallets. They will pay better and faster than bank guarantee fund.

[noormcs5]

A BIG WARNING here! STAY AWAY from Binance Free Accounts! At some points, they will freeze your assets and force you to provide KYC. THis happened to me! This Exchange is not serious at all!

If you are not doing anything suspicious, your account should not trigger risk management, because when it does, it will definitely freeze your account, I've been using it all this while and got no issues with them, if you are into any suspicious activity stay away from Binance.

Binance may be a very reliable site for exchanging there's no fear of being scammed albeit you are doing KYC here. Allows you to secure your own funds However, within the case of other sites got to work well verified.

The KYC are not safe not even at the Binance site. I know that Binance will never misuse or sell your KYC but you know that exchanges do get hacked and binance was also hacked couple of times. So if the hackers get the access of your KYC stored in the binance servers, they may sell it in the black market or misue them. But most of us don't have any option if we want to trade at binance and other sites we have to submit for KYCs.

[bct_ail]

What is the situation with the providers of Video Ident anyway? Are there any cases where their data has been passed on? Was there ever a hack or an inside job?

[tvplus006]

...There is therefore no data protection law to which they are subjected. It's naive to think that Binance is safe when it comes to KYC.

But if you want to use additional services of Binance, you have no choice but to pass the KYC or leave the exchange. I am now talking about such services as margin and futures trading, as well as participation in IEO, which are held on the exchange. Of course, there are many other exchanges, but they also can't guarantee security.

[Velkro]

Great post, very informative and detailed.
For me greatest danger of KYC is identity theft. Too many shady exchanges and bitcoin wallets demand KYC.
You never know where your data will go when you send it. Its prone to beign hacked or used with malicious intent.

[CandelaCoin]

Agreed. Can't trust most exchanges with my ID and personal info due to all the hacks.

[XZERO1]

But if you want to use additional services of Binance, you have no choice but to pass the KYC or leave the exchange. I am now talking about such services as margin and futures trading, as well as participation in IEO, which are held on the exchange. Of course, there are many other exchanges, but they also can't guarantee security.

Yeah, you are kind of forced to go through KYC if you are trading or withdrawing a rather large amount of assets because you can not just trust any new exchange these days, although I'm pretty sure many whales out there won't be using their own identity information to pass KYC and many of them buy identity information or the trading account(pre-verified) itself either from a person or the black market that we talked about in this topic earlier, also they have the option to use a few decentralized exchanges that still don't ask users for KYC, they definitely won't have as good experience using this exchange comparing to the centralized ones since it has larger spreads, lower volume, less number of pairs and higher fees(blockchain transaction fees), but regardless they will be able to trade big amount of assets without the need for KYC verification.

[Taskford]

Great post, very informative and detailed.
For me greatest danger of KYC is identity theft. Too many shady exchanges and bitcoin wallets demand KYC.
You never know where your data will go when you send it. Its prone to beign hacked or used with malicious intent.

Better ignore the sites asking for that information esecially if they are new nor unknown in the industry and we must learn to reject things whatever good offers they give to us, We need to be more careful its been expose that our details are been sold on the dark web so for personal protection we should avoid any and stay with familiar and famous sites.

[Stedsm]

A major point you didn't determine here is - KYC is pointless.
I mean, what's the point of KYC here when we are talking about a community which is interested in sheer anonymity in order to save their asses from governments and other financial authorities which keep track of whatever we do, be it online or offline?

[jademaxsuy]

A major point you didn't determine here is - KYC is pointless.
I mean, what's the point of KYC here when we are talking about a community which is interested in sheer anonymity in order to save their asses from governments and other financial authorities which keep track of whatever we do, be it online or offline?

Yes it may be pointless in a decentralized system and most of us hate this KYC. This is a private identity interception.

Yet, we could also blame them because this is their part of intervention among users who are abusing the system. Having the infoemation with them could be easily track and law enforcers will not be having a hard time to locate the users for illegal use of the system that involves high value of money traded. This could be an indicator also of an illegal activities like transaction of payments for illegal drugs to where it is possible to be done in cryptocurrency.

Even though KYC really dangerous for the users but since our love to cryptocurrency is strong then we have to do it without questioning the KYC system.

[Stedsm]

Even though KYC really dangerous for the users but since our love to cryptocurrency is strong then we have to do it without questioning the KYC system.

We have to do what? KYC?
You just gave a great example first and now you're only saying this? I mean, just think of a project you're heavily invested in, and you decide to go for a KYC check that's levied by them by saying that you won't be eligible to get your coins for which you have paid, unless you go for KYC and give them your personal details.

There will be 2 scenarios:

-   What if you give a fake ID? How will they determine whether it's you only or you have used someone else's docs in order to gain your coins? This would be cheating for your own financial benefits, though it's true that you've purchased the coins yourself but then giving a fake ID is also cheating.

-   What if the company you've invested in, runs away with both your documents and the money you invested? Don't you think they may use your docs anywhere including dark places so whatever they'll do, you'll be penalized for the same? What will happen if that company turns out to be a drug dealer and gives their clients' (investors') KYC docs to other parties as well as police in order to remain safe from them?

[tvplus006]

Yeah, you are kind of forced to go through KYC if you are trading or withdrawing a rather large amount of assets because you can not just trust any new exchange these days, although I'm pretty sure many whales out there won't be using their own identity information to pass KYC and many of them buy identity information or the trading account(pre-verified) itself either from a person or the black market that we talked about in this topic earlier, also they have the option to use a few decentralized exchanges that still don't ask users for KYC, they definitely won't have as good experience using this exchange comparing to the centralized ones since it has larger spreads, lower volume, less number of pairs and higher fees(blockchain transaction fees), but regardless they will be able to trade big amount of assets without the need for KYC verification.

If you trade on the Binance exchange or other centralized exchange where KYC is passed to another person, you risk losing your Deposit. At any time, the exchange may require re-verification and if you do not have access to the documents of another participant that were used for KYC, your account will be blocked.

[bakasabo]

If you trade on the Binance exchange or other centralized exchange where KYC is passed to another person, you risk losing your Deposit. At any time, the exchange may require re-verification and if you do not have access to the documents of another participant that were used for KYC, your account will be blocked.

Never heard that someone (ie. Binance) asked to pass verification once again. Do you know how the exchange will act, if I provide other documents, than I used to pass verification before, because my previous are expired? For example passport's ID changes when you change expired to new one. Also expired one is taken away and it is impossible to provide old one and new one to exchange.