Crypto Scammers Hiring KYC Actors to Build Trust and Defraud Investors: Report

Crypto Scammers Hiring KYC Actors to Build Trust and Defraud Investors: Report

A new report from blockchain security firm CertiK revealed that a large group of professional “Know Your Customer (KYC)” actors are employed by dubious blockchain developers and scammers to swindle crypto investors.

KYC verification systems are used by crypto projects in the Web3 space to establish customer identity and qualify the source of funds. The process helps the platforms protect themselves against fraud, money laundering and terrorist financing.

Crypto fraudsters hire KYC actors for scams

According to CertiKs reportare the actors hired to complete the KYC process on behalf of fraudulent project owners who want to gain the trust of the crypto community before committing to a insider hack or get out scampopularly known as carpet pulling.

During its investigation, the security company identified a KYC actor who agreed to share detailed information about the industry. The actor claimed he had been in the business for three years and provided links to marketplaces where he got his gigs.

The marketplaces are mostly hosted on Telegram, Discord, some cheap phone apps, and ads on gig websites. In consultation, both parties use an escrow service for payment.

How much do KYC actors earn?

Interestingly, the actors earn small amounts of money for each role. Depending on the requirements of the gig, some earn as low as $8. The interviewee revealed that he made between $20 and $30 per deal.

“This sad situation is unfortunately not surprising as we know that the modern scam industry is not ashamed to organize human trafficking and slavery for their benefit,” CertiK wrote.

Low requirements such as bypassing a base KYC process to open a bank or exchange account from a developing country are valued low, while more complex verification processes cost more. For example, the company identified an actor who was making $500 a week for acting as the CEO of a crypto project.

Where are these KYC actors located?

In particular, the actors were mainly from developing countries and the marketplaces had a large concentration in Southeast Asia, with group sizes between 4,000 and 300,000 members.

CertiK said it had discovered more than 500,000 members who were sellers or buyers of counterfeit KYC badges. After further analysis, the company found that more than 40 websites had displayed such fraudulent ads and more than 2,000 badges had already been issued.

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