From:Â RegTech Analyst
Cryptocurrency exchange Digitex will no longer do know your customer (KYC) checks on its users after personal data of more than 8,000 customers was recently stolen.
In response to a former employee absconding with passports and driver licences of thousands of customers, Adam Todd, CEO of Digitex, has decided to remove KYC entirely from the platform.
KYC is often put in place primarily to reduce the risk of money laundering and terrorism financing.
The anonymity providedÂ by many cryptocurrencies make it more difficultÂ to prosecute criminals guilty of terror financing, money laundering and abuse of children, according to Neil Walsh, chief of the Cybercrime and Anti-Money-Laundering section of the United Nationsâ€™s Office on Drugs and Crime, who spoke on the subject in August 2019.
Similarly, a recent report from IntSights, the threat intelligence company, and CipherTrace, the leader in cryptocurrency intelligence, suggested that cryptocurrencies play a huge role in the emerging Latin American cyber crime sector, withÂ criminals using digital currencies to launder money.
However, Todd does not seem to give much credence to the notion that those concerns should apply to crypto exchanges.
â€œI am not going to spend tooÂ longÂ on this point because it is ridiculous,â€ he said inÂ a statementÂ announcing the removal of the KYC on the platform. â€œPeople are not laundering Ethereum into DGTX to fund international terrorism. [I] just sound stupid even saying that statement. Itâ€™s fucking ridiculous to even say it. So I am not going to waste your time talking about that side of the argument. It is obvious bullshit. Itâ€™s a crook of shit and I am calling it out for what it is.â€
Todd then added that â€œthe real reason for KYC is that Big Brother wants to know what everybody is doing all the time.â€
â€œHe wants to know how much youâ€™ve got and what youâ€™re doing with it,â€ he continued.
Digitex will remove KYC at the end of the week. In a bid to appease US regulators, Digitex will also bar US-based users from using the service by restricting American IP addresses and making people check a tick box to say that they are not from the country. â€œI believe that is every reasonable measure I can take,â€ he said.
The news about Digitex new approach comes as other crypto exchanges â€“ such asÂ GlobitexÂ andÂ DeribitÂ â€“ are upping their anti-money laundering (AML) and KYC efforts.
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