Crypto Scammers Hire KYC Actors to Build Trust and Scam Investors: Report

Crypto Scammers Hire KYC Actors to Build Trust and Scam Investors: Report

A new report from blockchain security firm CertiK has revealed that a large group of professional “Know Your Customer (KYC)” actors are employed by dubious blockchain developers and scammers to defraud 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 platforms protect themselves against fraud, money laundering and terrorist financing.

Crypto Fraudsters Hire KYC Actors for Scams

According to CertiK reportactors are hired to complete the KYC process on behalf of fraudulent project holders who wish to gain the trust of the crypto community before executing a insider hack or exit scampopularly known as carpet pulling.

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

Markets are mostly hosted on Telegram, Discord, some low requirement phone apps, and ads on gig websites. Upon agreement, both parties will use an escrow service for payment.

How much do KYC actors earn?

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

“This sad situation is unfortunately not surprising as we know that the modern scam industry has no shame in organizing human trafficking and slavery for their benefit,” CertiK wrote.

Low requirements like bypassing a base KYC processes of opening a bank account or currency exchange from a developing country are unpopular, while more complex verification processes cost more. For example, the company identified an actor who earned $500 a week for acting as the CEO of a crypto project.

Where are these KYC actors located?

Notably, the players were mostly from developing countries and the marketplaces had a major concentration in Southeast Asia, with group sizes between 4,000 and 300,000 members.

CertiK said it discovered over 500,000 members who were either sellers or buyers of fake KYC badges. Through further analysis, the company discovered that more than 40 websites had served such fraudulent advertisements, with over 2,000 badges already issued.


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