Crypto app frauds on the rise; what you should know before investing

cnbctv18.com:

Financial services organizations are mandated by know-your-customer (KYC) and anti-money laundering (AML) laws to verify the identity of users who open new accounts. However, crypto apps are not entirely secure yet, and there are hidden backdoors to sneak information out.While cryptocurrency prices were touching new all-time highs (ATH) in 2021, so were crypto-related crimes.

A Chainalysis report revealed a whopping $14 billion was siphoned off from wallets linked to illicit activities in 2021. That is a 79.5 percent jump from the $7.8 billion swindled in 2020.As crypto adoption continues to rise faster than ever, it is no surprise that crypto theft is picking up pace too.

In 2021, the global crypto transaction volume was pegged at $15.8 trillion, a number that has ballooned by 567 percent since 2020.Scammers admitted they opened between 1,500-2,000 fraudulent accounts on crypto exchanges using fake identities every month, in a telegram interview with Crypto.news. The identities were created using stolen personal information and used for money laundering and other criminal activities.

Let’s find out how this was done.As part of the robust Customer Identification Program, crypto exchanges must verify the KYC details, including the address, of new account creators. To complete this step, users must submit proof of address.Incognia, an identity authentication service provider, took a closer look at the 19 most prominent crypto apps to evaluate their user identification process.