To trade on an exchange, a cryptocurrency user needs to undergo a rigorous process of providing various personal data, which includes residential addresses, photos, scans of government-issued ID.
On the other hand, non-law-abiding citizens can pay up to as little as $150 for a verified, ready-to-use account in another person’s identity at Binance US, Coinbase Pro, Kraken, or numerous other exchanges, according to a CoinDesk investigation.
The term ‘verified’ in this process does not equate to legitimate. Illegal merchants create these accounts using other people’s identities or under made-up names, which deceive exchanges in verifying them as legitimate users. These underground entities sell these verified accounts on Telegram and internet forums.
Moreover, these merchants peddle these fraudulent accounts to crypto exchanges and sell them to mainstream payment providers, including Transferwise and Square’s Cash App.
On average, an operator of such a service produces 1,500 to 2,000 synthetic verified accounts every month, according to a service provider in an interview with CoinDesk.
According to a source who refused to provide his name, these operations have several employees and even departments within the business. As a result, there is an abundance of competitors in this field.
A CoinDesk report reviewed various crypto and payment accounts that were purchased from several black-market vendors. The report showed that most vendors were utilising private data about individuals who had no idea that their identities were used. As this breach continues to infiltrate the crypto ecosystem, so are crypto platforms working towards tackling the challenges. Besides the regular security procedures, Immediate-edge.io make use of extra tech-based infrastructure to solve these challenges.
The report also demonstrated that individuals do not desire to reveal their real identities because they fear being approved.
The current scope of the market cannot be estimated since black-market vendors do not publish their revenues.
Observations show the vigorous effort of vendors who advertise and broker fake accounts for both traditional payment services and crypto exchanges, explained Baltimore-based cybersecurity firm senior threat intelligence analyst at Zerofox Andrew Gunn.
Furthermore, ZeroFox mined data over the past year that over one million posts on forums that advertise these accounts.
The possibility of buying a fake digital account for $200 shows an issue in the effectiveness of the “know-your-customer” (KYC) policies implemented by crypto-linked establishments around the world. Regular crypto users have to submit their information several times to be verified, and for months or weeks to withdraw their money, users with fake identities can transact easily.
Black markets flourish both on the dark web and the clear web. The dark web can be accessed through the anonymous Tor browser, while the clean web is where most people browse daily.
Various platforms are regularly visited by scammers, professional hackers, and black-market vendors. These forums display accounts for sale to be used for a wide range of payment services and crypto exchanges that include peer-to-peer trading platform Localbitcoins to mainstream payment services Transferwise and Revolut to professional trading venue Coinbase Pro.
The price range is between $150 to $500, which is disclosed through personal chat to a prospective buyer, or the price list is posted through a web page. A buyer needs to have an account to communicate with a vendor, pay in crypto, and obtain the requested account data.
Some accounts were initially registered by legitimate clients that hackers have hacked. The owner may observe the irregularities and report them to the platform administrator. Also, some vendors create accounts based on fake or stolen data. Other cases also involve users who register their names and then sell them to the vendors.
The vendors say that they proceed with the verification process to open and control the accounts until they are sold. Therefore, it is possible that owners of these identities do not know that their accounts exist.
Other methods also exist, such as people searching for others to lend their identities for account registration. These people search for this job posting. Others also offer counterfeit IDs.
Always do your own research.
