In a story for 404 media, investigative journalist Joseph Cox reported that by using a variety of false identification, passports, and other legal documentation, he was able to create a verified account on cryptocurrency exchange OKX. This would already suggest that the platform doesn’t have particularly effective or stringent know-your-customer (KYC) or anti-money laundering (AML) procedures in place but the story goes way beyond that and is much worse.
No verification, no cry
Fake IDs and legal documents aren’t anything new or particularly noteworthy, but the fact that someone can create and verify a fake identity across numerous websites is concerning and points to a failure of the rules and regulations guiding digital financial institutions.
After learning how simple it had been to bypass the KYC/AML process at OKX, Protos reached out to customer support on Telegram who, after calling Cox’s story “fake news,” explained that no real KYC/AML takes place when an individual creates an account or deposits cash or cryptocurrencies. This is an illegal and incorrect way to run a KYC/AML program.
Long before any money is allowed to be deposited into most financial institutions — from banks to brokerages — an individual’s identity is proven. Often these checks and balances can take hours or days to conduct, and are intended to protect the companies from accepting laundered or improperly acquired funds.
According to OKX’s own customer support, it isn’t conducting any of the necessary mechanisms to keep dirty money completely off the platform.
Read more: Iranian crypto exchange Bit24 reportedly leaks 230,000 users’ KYC data
Conspiracy theorists can call this a W
What customer support did confirm for Protos is that KYC/AML checks are only conducted when an individual is attempting to take money off of the OKX platform — likely keeping many people from being able to withdraw or move their funds.
This characterization of how many crypto exchanges conduct business has been an ongoing theory across Twitter and Reddit for years. When told that this wasn’t a properly instituted KYC/AML program, support instead suggested that “that is how [every] exchange [all] over the world does [KYC/AML], not only OKX.”
This is not the slam dunk that the customer support representative believed it was, proposing instead that OKX isn’t the only exchange completely nullifying effective KYC/AML, but rather that every exchange doesn’t utilize KYC/AML in any meaningful sense.
When pressed on the legality and morality of this OKX customer support fell silent.
Protos will update this article if and when any other OKX employees or representatives reach out.
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