CertiK experts reveal the KYC verification black market

Cryptocurrency scammers have access to a ‘cheap and affordable’ black market, whose participants are willing to undergo identity verification on their behalf under procedures KYC, according to CertiK researchers.

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CertiK has unveiled an underground ring of KYC actors for hire, used by rogue developers to scam #Web3 communities.

From our conversation with a KYC actor, to our deep-dive investigation into their underground world.. The dark side of #KYC 👀👇https://t.co/Whza1Hd1HU

— CertiK (@CertiK) November 17, 2022

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In some cases, such “professional KYC actors” became the faces of crypto projects to win community trust, with subsequent insider hacks or exit scams.

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Primarily, this involves providing data to open bank accounts, exchange accounts, and gaining access to fiat gateways.

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Analysts found about 20 underground marketplaces for hiring KYC actors, mostly hosted on Telegram and Discord. The price for passing a verification starts at $8 for the simplest procedure, averaging $20-30.

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Rates rise depending on the complexity of the verification requirements, with high demand for participants from countries with low money-laundering risk. In a small number of cases, actors played the role of leaders of fraudulent projects, paid up to $500 per week.

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Most of the service providers on this market live in developing countries with a high concentration in Southeast Asia, CertiK noted. Its overall size, including sellers and buyers, was estimated by experts at about 0.5 million participants. Marketplaces unite between 4,000 and 300,000 of them.

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Experts noted that there are more than 40 websites that provide services for crypto project founders to pass identity verification and issue the so-called “KYC badges”.

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In CertiK’s view, the operation of these platforms is “too superficial and amateurish” to detect real threats. Given the black market, such verifications are used by scammers to mislead the community and investors, the experts say.

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As reported in Immunefi, for the third quarter the Web3 ecosystem’s total losses from hacks and fraud amounted to $428.7 million.

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