Why is KYC mandatory in CEX?

[Outhue]

Another thing is, when it comes to airdrops the owner of that project has some way to prevent duplicates and one of them is to make their participants do KYC in order to prevent them from getting double rewards or sometimes this is their way to not distribute the rewards for others because in the first place, they tricked their participants and they just implemented these rules in the last minutes when they are about to distribute the rewards for airdrops or bounties.

Yes, in the past many new projects that introduced airdrops end up asking participants to pass KYC before they can get the free coins, but there are few projects that collected KYC information from participants and they still don't give up the free coins and tokens, makes me wonder what they did with the KYC details they took from people.

I was against KYC in the past but not anymore, there is no easier way to get rid of money laundering, and some bad criminal behaviors in the crypto space than using KYC, if there is no KYC the crypto mess would be more than what it is today.

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[Despairo]

One of the reasons for making KYC mandatory is to prevent money laundering. Every country has a law and when a CEX does business globally it can do business in those countries as per the laws of those countries and that's why KYC is being made mandatory gradually. Binance made kyc mandatory long ago. A few days ago Kucoin made kyc mandatory. Still exchanges like MEXC, Gate.io allow trade, deposit, withdraw without kyc but very less amount. In future they may also make kyc mandatory.  So it is better to complete kyc beforehand

Asking KYC to prevent money laundering is pointless, what if the money launderer use stolen KYC and successfully laundering the money? what will the centralized exchange do? if they report it to SEC and it mean the SEC will accuse a wrong person since the hacker is using stolen KYC.

Nah, it's worse to complete KYC beforehand, the best is just choose a no KYC P2P or decentralized exchange.

[MusaMohamed]

Asking KYC to prevent money laundering is pointless, what if the money launderer use stolen KYC and successfully laundering the money? what will the centralized exchange do? if they report it to SEC and it mean the SEC will accuse a wrong person since the hacker is using stolen KYC.

Nah, it's worse to complete KYC beforehand, the best is just choose a no KYC P2P or decentralized exchange.

If money laundering is doing professionally, KYC is not enough because those guys have many tools to use stolen documents and submit KYC.

Governments and exchanges can use ChipMixer as their example that KYC is helpful, not useless, for them. They got the guy behind ChipMixer by KYC but it is useless and dangerous for people who don't care to do money laundering. They can not trust exchanges, governments to protect their privacy after KYC.

Why KYC is extremely dangerous – and useless

[Despairo]

If money laundering is doing professionally, KYC is not enough because those guys have many tools to use stolen documents and submit KYC.

Governments and exchanges can use ChipMixer as their example that KYC is helpful, not useless, for them. They got the guy behind ChipMixer by KYC but it is useless and dangerous for people who don't care to do money laundering. They can not trust exchanges, governments to protect their privacy after KYC.

Why KYC is extremely dangerous – and useless

Lol.

I suggest you to read the thread you took before creating post, you're contradict with the thread was talking about. You said if KYC is helpful and it can be used to fight against money laundering, while the thread was pointed about if KYC is useless and it help the criminal to stay undetected, which is same what I pointed in my post.

Conclusion: KYC is useless

The primary result of this evaluation is apparent: KYC is not only useless but ultimately encourages what it is supposed to prevent. KYC creates new areas of crime (identity trading of real users) and boosts existing areas of crime (criminals can now go undetected by abusing the identities of innocent users). It also blatantly endangers the privacy and security of all customers.

Therefore, the advertised effectiveness of digital KYC in crypto unfortunately exists only in theory. The community would be better off acknowledging the fact that not only KYC is useless, but it is also dangerous and promotes crime. Since documents for KYC are sold illegally on the web or are even faked by artificial intelligence, KYC doesn’t actually prove anything anymore.

In fact, KYC is encouraging scams and crime as well as endangering the privacy and safety of all customers through identity theft. This creates a dangerous dynamic for users who are forced to perform a KYC check: tons of personal documents are being collected by criminals and will likely go public in the future to a degree we have not seen before.

[dlightag]

The exchange want to know they customer in process of (KYC) simply means know your customer, by so doing that the exchange as well know the actual active users of the exchange in other words to limit money laundering in the exchange and also stopped multiple users in the exchange platform, like wise not participate airdrop with a multiple accounts, one user, one entry point.

[gunhell16]

Privacy is important when it comes to Cryptocurrency, so why do exchanges like Bitget require KYC (Know Your Customer) for all users, even those who only want to get airdrops? I thought KYC should be for those transacting many Bitcoins, Is it really necessary for everyone?

In a regulated exchange, it is normal for the platform to ask for KYC from prospective clients. Of course, they are under government regulation, which is why they can legally operate. It is also up to us whether we want to submit or not.

The exchange does not force us to do this, as long as if we want to use their platform, we must also follow the rules it has, and it may also be one of the security measures for our account using their platform. But if it's a decentralized platform exchange, we don't need to submit KYC. just as simple as that anyway.

[cafter]

Privacy is important when it comes to Cryptocurrency, so why do exchanges like Bitget require KYC (Know Your Customer) for all users, even those who only want to get airdrops? I thought KYC should be for those transacting many Bitcoins, Is it really necessary for everyone?

because they have to follow rules set by governments to prevent illegal activities like money laundering and fraud. KYC helps the exchange verify who you are and reduces risks. It also lets the exchange work with banks and offer better customer support.
some users may not like it, KYC is seen as necessary to keep the exchange safe and follow the laws.
not all exchanges have the same rules, so you can choose one that follow your privacy preferences.

money laundering can be done through stolen identity but it's hard to do 3rd level KYC which maybe applicable for transacting big amount.

[abel1337]

Privacy is important when it comes to Cryptocurrency, so why do exchanges like Bitget require KYC (Know Your Customer) for all users, even those who only want to get airdrops? I thought KYC should be for those transacting many Bitcoins, Is it really necessary for everyone?

In a regulated exchange, it is normal for the platform to ask for KYC from prospective clients. Of course, they are under government regulation, which is why they can legally operate. It is also up to us whether we want to submit or not.

The exchange does not force us to do this, as long as if we want to use their platform, we must also follow the rules it has, and it may also be one of the security measures for our account using their platform. But if it's a decentralized platform exchange, we don't need to submit KYC. just as simple as that anyway.

It's just sad that there's a heavy limit on centralized exchange customer that don't submit their KYC even if it's not mandatory. The law are the one who keeps binding exchange to collect KYC, it is a different thing if we talk about decentralized exchange. Your account is your own wallet, you don't need to prove that.

At the end of the day it is always our choice if we want the convenience with KYC or the cons of using decentralized exchange.

[bayu7adi]

The exchange want to know they customer in process of (KYC) simply means know your customer, by so doing that the exchange as well know the actual active users of the exchange in other words to limit money laundering in the exchange and also stopped multiple users in the exchange platform, like wise not participate airdrop with a multiple accounts, one user, one entry point.

For international exchanges with a large user base, the KYC (Know Your Customer) process doesn't need to be as stringent as those overseen by government-regulated exchanges, such as Binance, which enforces a withdrawal limit of 2000 USDT per day for users who haven't completed KYC. I believe that for the purposes of airdrops, very few participants receive more than 2000 USDT daily, so Binance's KYC regulations still appear quite reasonable.

The solution is to consider switching to a different exchange platform and not remain bound to one that imposes complex rules on its users.

[taufik123]

-snip-
At the end of the day it is always our choice if we want the convenience with KYC or the cons of using decentralized exchange.

Yup, it's just a choice, about privacy being taken care of or leaving it to the centralized Exchange.

Some centralized exchanges also only apply KYC to certain withdrawals and it is not binding to fully submit KYC.
Many people do KYC but they try to falsify their identity, and now it's even easier to do so because technology is getting more sophisticated.

Decentralized exchanges like DEXs would be a good choice without having to provide any ID or KYC, but be careful as many DEXs are managed by scammers.

-snip-
such as Binance, which enforces a withdrawal limit of 2000 USDT per day for users who haven't completed KYC. I believe that for the purposes of airdrops, very few participants receive more than 2000 USDT daily, so Binance's KYC regulations still appear quite reasonable.

If they are just ordinary traders, 2000 USDT is a lot of money and there will be no limit set.
Binance is the best place at the moment, although the actual KYC implementation is also quite strict

[The Cryptovator]

The exchange want to know they customer in process of (KYC) simply means know your customer, by so doing that the exchange as well know the actual active users of the exchange in other words to limit money laundering in the exchange and also stopped multiple users in the exchange platform, like wise not participate airdrop with a multiple accounts, one user, one entry point.

This isn't exactly why exchanges ask for KYC actually in my opinion. They are obliged to follow government rules. Because to operate centralized exchanges they must need to get licenses from the government. Money Laundering is just an excuse actually. We have seen exchanges even ask for KYC and proof of source funds. That's ridiculous actually why they should ask for source funds. But most probably legal authorities force them sometimes. Exchange just wants to make ready everything and provide data to legal authorities when necessary.

[armanda90]

For international exchanges with a large user base, the KYC (Know Your Customer) process doesn't need to be as stringent as those overseen by government-regulated exchanges, such as Binance, which enforces a withdrawal limit of 2000 USDT per day for users who haven't completed KYC. I believe that for the purposes of airdrops, very few participants receive more than 2000 USDT daily, so Binance's KYC regulations still appear quite reasonable.

The solution is to consider switching to a different exchange platform and not remain bound to one that imposes complex rules on its users.

I don't think that rule above still applies for Binance available withdrawing more than $2,000 in daily day for user who haven't completed KYC, current update all Binance user need to verifying their account if want trade, deposit and withdrawing fund in this CEX exchange platform. Its not problem about why have CEX exchange still required with KYC because government intervention make this situation for CEX exchange have to complete this rule and make the exchange operation still running well.

Current feature with many CEX exchange available with P2P trading make us have to complete with KYC, in Binance, Kucoin and several CEX exchange have feature with P2P and required for passing KYC to make us easily selling assets through this feature without need deposit or withdrawing trough local CEX exchange market.

[BVeyron]

Privacy is important when it comes to Cryptocurrency, so why do exchanges like Bitget require KYC (Know Your Customer) for all users, even those who only want to get airdrops? I thought KYC should be for those transacting many Bitcoins, Is it really necessary for everyone?

KYC is the universal way to avoid legal issues, since, firstly, any anonymous money transfers are a subject of suspicions from the officials' point of view. Secondly, there are thousands of individual collisions (person vs person), which can also end up in court, some of them include cryptocurrency and cryptotrading problems... So all the payment histories should be clearly identified in order to figure out responsibilities...

[Z_MBFM]

Privacy is important when it comes to Cryptocurrency, so why do exchanges like Bitget require KYC (Know Your Customer) for all users, even those who only want to get airdrops? I thought KYC should be for those transacting many Bitcoins, Is it really necessary for everyone?

Yes privacy is important that's why Exchanges also store kyc documents securely. The reason for taking kyc is to keep users in a loop. and avoid incidents like money laundering. CEX has a core team and they don't hide their identity so if money laundering happens through an exchange then the government of the country from which the money is laundered will take legal action against that exchange.  And in this case if the exchanger does not take kyc from their customers then they will not be able to identify the money launderer.  And that's why now CEXs are making kyc mandatory.

[sompitonov]

-snip-
such as Binance, which enforces a withdrawal limit of 2000 USDT per day for users who haven't completed KYC. I believe that for the purposes of airdrops, very few participants receive more than 2000 USDT daily, so Binance's KYC regulations still appear quite reasonable.

If they are just ordinary traders, 2000 USDT is a lot of money and there will be no limit set.
Binance is the best place at the moment, although the actual KYC implementation is also quite strict

Some people try to cheat and create several accounts without KYC on Binance in order to split 2000 USD for withdrawal of funds without KYC from several accounts.

Already several years ago, many said that regulators in most countries of the world would increase pressure on CEX over time. As we see, this is what happens. But there will also be developers who will create platforms without KYC, it’s just a constant struggle. But over the past years, I would say that the regulation of the CEX and the tightening of the KYC tip the scales on this scale. I wouldn't like there to be complete anonymity, probably in the form that it is now in CEX I am satisfied. On the other hand, further tightening will look too harsh.

[Blitzboy]

-snip-
such as Binance, which enforces a withdrawal limit of 2000 USDT per day for users who haven't completed KYC. I believe that for the purposes of airdrops, very few participants receive more than 2000 USDT daily, so Binance's KYC regulations still appear quite reasonable.

If they are just ordinary traders, 2000 USDT is a lot of money and there will be no limit set.
Binance is the best place at the moment, although the actual KYC implementation is also quite strict

Some people try to cheat and create several accounts without KYC on Binance in order to split 2000 USD for withdrawal of funds without KYC from several accounts.

Already several years ago, many said that regulators in most countries of the world would increase pressure on CEX over time. As we see, this is what happens. But there will also be developers who will create platforms without KYC, it’s just a constant struggle. But over the past years, I would say that the regulation of the CEX and the tightening of the KYC tip the scales on this scale. I wouldn't like there to be complete anonymity, probably in the form that it is now in CEX I am satisfied. On the other hand, further tightening will look too harsh.

KYC-free networks promise anonymity but also pose security and legal dangers.

My experience has shown that while a totally decentralized exchange is intriguing, it lacks consumer protection features like existing financial services. Crypto enthusiasts should acknowledge this trade-off and agree on KYC limits. Staying static or using outmoded approaches is not an option in a fast-changing world. I support continued conversation to balance security and privacy.

[irhact]

Privacy is important when it comes to Cryptocurrency, so why do exchanges like Bitget require KYC (Know Your Customer) for all users, even those who only want to get airdrops? I thought KYC should be for those transacting many Bitcoins, Is it really necessary for everyone?

Just because you're transacting small Bitcoin doesn't mean you're not an individual that is engaging in illegal activities like money laundering or other crimes. Judging from the exchange point of view, KYC is needed by everyone because they want to monitor everyone transaction and know what their users are using their Bitcoin for. KYC is just way of the government monitoring everyone and doesn't do any good thing for the users bit does good for the centralized exchanges.

They only make it sound like KYC are good so we don't fight them and just accept whatever they're telling us. KYC is a must for those cex exchanges under the government control but not all agree to accept their controlling behavior and that's why we have CEX with no KYC.

[sompitonov]

-snip-
such as Binance, which enforces a withdrawal limit of 2000 USDT per day for users who haven't completed KYC. I believe that for the purposes of airdrops, very few participants receive more than 2000 USDT daily, so Binance's KYC regulations still appear quite reasonable.

If they are just ordinary traders, 2000 USDT is a lot of money and there will be no limit set.
Binance is the best place at the moment, although the actual KYC implementation is also quite strict

Some people try to cheat and create several accounts without KYC on Binance in order to split 2000 USD for withdrawal of funds without KYC from several accounts.

Already several years ago, many said that regulators in most countries of the world would increase pressure on CEX over time. As we see, this is what happens. But there will also be developers who will create platforms without KYC, it’s just a constant struggle. But over the past years, I would say that the regulation of the CEX and the tightening of the KYC tip the scales on this scale. I wouldn't like there to be complete anonymity, probably in the form that it is now in CEX I am satisfied. On the other hand, further tightening will look too harsh.

KYC-free networks promise anonymity but also pose security and legal dangers.

My experience has shown that while a totally decentralized exchange is intriguing, it lacks consumer protection features like existing financial services. Crypto enthusiasts should acknowledge this trade-off and agree on KYC limits. Staying static or using outmoded approaches is not an option in a fast-changing world. I support continued conversation to balance security and privacy.

To a large extent I agree with you. There is a high probability of circulation of dirty money on KYC-free networks. Of course, no one wants to get involved with them. You can also lose money there and have nothing to prove. Therefore, the average user in the majority chooses CEX.

The balance between security and privacy is the best it can be for me at the moment. In any case, development in the field of crypto is proceeding at a rapid pace and perhaps soon we may see something that we are not even aware of.

[ajiz138]

The exchange want to know they customer in process of (KYC) simply means know your customer, by so doing that the exchange as well know the actual active users of the exchange in other words to limit money laundering in the exchange and also stopped multiple users in the exchange platform, like wise not participate airdrop with a multiple accounts, one user, one entry point.

This isn't exactly why exchanges ask for KYC actually in my opinion. They are obliged to follow government rules. Because to operate centralized exchanges they must need to get licenses from the government. Money Laundering is just an excuse actually. We have seen exchanges even ask for KYC and proof of source funds. That's ridiculous actually why they should ask for source funds. But most probably legal authorities force them sometimes. Exchange just wants to make ready everything and provide data to legal authorities when necessary.

Since this is a government-registered platform company, they have to do this requirement for security and regulation, so all those under the government's auspices will obviously be asked for KYC for the sake of avoiding money laundering or other illegal activities.

Customers do not protest this if they do not do it, all features will be locked if they want to continue then do KYC, such are the demands that exchanges face now.

On the grounds that they want to know the legitimate source of funds, (but I don't think they care about that) it is worth saying that now most exchanges KYC is a necessary thing.

[molsewid]

The exchange want to know they customer in process of (KYC) simply means know your customer, by so doing that the exchange as well know the actual active users of the exchange in other words to limit money laundering in the exchange and also stopped multiple users in the exchange platform, like wise not participate airdrop with a multiple accounts, one user, one entry point.

This isn't exactly why exchanges ask for KYC actually in my opinion. They are obliged to follow government rules. Because to operate centralized exchanges they must need to get licenses from the government. Money Laundering is just an excuse actually. We have seen exchanges even ask for KYC and proof of source funds. That's ridiculous actually why they should ask for source funds. But most probably legal authorities force them sometimes. Exchange just wants to make ready everything and provide data to legal authorities when necessary.

Since this is a government-registered platform company, they have to do this requirement for security and regulation, so all those under the government's auspices will obviously be asked for KYC for the sake of avoiding money laundering or other illegal activities.

Customers do not protest this if they do not do it, all features will be locked if they want to continue then do KYC, such are the demands that exchanges face now.

On the grounds that they want to know the legitimate source of funds, (but I don't think they care about that) it is worth saying that now most exchanges KYC is a necessary thing.

Indeed, that is the reason why CEX has KYC. Also, some of them can have a p2p wherein you can convert your crypto to your local currency via bank or any digital wallet that is also registered to the government. Actually, I am more into CEX than DEX, for me it is more safer and also some projects cannot list their token in cex without any docs and enough money to pay especially to tier 1 exchanges.