With exit scams and rug pulls at unprecedented levels in the Web3 sector, investors are becoming more cautious about a project’s team and its background. However, CertiK found that scammers have found a backdoor and are hiring “professional KYC actors” to bypass regular verifications for as low as $8.
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
KYC actors are individuals hired to conduct Know Your Customer “on behalf of rogue project owners looking to gain trust in the crypto community prior to an insider hack or an exit scam,” the blockchain security company states in its report.
With the help of an insider who has been a KYC actor for three years, CertiK uncovered a thriving marketplace in which basic KYC services can go for just a few dollars.
The report reveals that most markets are hosted on Telegram and Discord. Some are even conducted via job ads on mainstream gig websites. Once a price is agreed on, the two parties use an escrow service for the payment.
Bypassing basic KYC processes to open a bank or exchange account costs as little as $8. This price goes up depending on the complexity of the verification process. If the buyer needs an actor who is a national resident of a country considered low-risk for money laundering, thus unlikely to be flagged, the price jumps up significantly.
There’s no limit to what is offered in these markets. CertiK found some roles, such as acting as the CEO of a Web3 startup that pays upwards of $500 a week.
“Our explorations show that the global prevalence of these OTC marketplaces is significant, with an above average concentration in South-East Asia and group sizes ranging from 4,000 to 300,000 members,” CertiK revealed.
The company found over 500,000 members on these marketplaces who were either buying or selling fake KYC services.
With KYC verification now available at the price of a few dollars, investors must conduct intense due diligence before investing in a Web3 company, the report advises.
“The only way to truly verify the team behind a project is to conduct a proper, thorough background investigation on each key member and ensure this investigation is carried out by a team of professional, experienced criminal investigators and intelligence analysts,” CertiK says.
Watch: The BSV Global Blockchain Convention presentation, Trust But Verify: Everything
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