Binance staffs helping Chinese customers manipulate KYC security systems
Binance is on the news again, this time for an allegation of a security breach on its KYC system. The Binance founder Changpeng "CZ" Zhao has compromised the exchange's know-your-customer (KYC) system.
It is on record that China citizens are not allowed to trade Cryptocurrency due to the ban on exchanges and Cryptocurrency in the country. However, Binance customers in China still find ways to subvert the Binance security control to hide their identities such as country of origin, fake bank details, etc. This revelation was discovered in Binance's official Chinese chatrooms.
A CNBC report that revealed the shocking revelation disclosed that hundreds of messages from Binance's Chinese community chatrooms on discord and telegram were obtained and reviewed where the security breaches were discovered.
According to CNBC, the messages reviewed came from Binance employees' accounts or Binance-trained representatives known as "Angels" The findings on the messages revealed the discussion about the different methods that can be used to bypass Binance's KYC, residency, and other verification systems.
Some of the techniques that Binance's employees and representatives were found to have shared with the Chinese customers involved how to fake documents, forging bank accounts, and residency addresses, and other ways to manipulate the Binance security systems.
These Binance employees and representatives went as far as sharing tutorial video guides and text documents that teach those Chinese customers how to falsify their credentials to obtain Binance cards that can turn their Binance accounts into conventional checking accounts.
This is a great risk the Chinese users are putting themselves into, and the Binance founder is fingered for aiding this illegality. Crypto exchanges have been banned in China since 2017, while a total ban on anything related to cryptocurrency was pronounced in 2021. Crypto products are illegal in China, and these are what the Chinese residents are trying to access through Binance illegally.
This discovery call into question the effectiveness of Binance's anti-money-laundering efforts. Platforms such as Binance with international business coverage shouldn't take security lightly, because KYC and anti-money-laundering efforts are crucial to curtailing customers' illegalities and the prevention of fraud or terrorism.
This discovery has placed Binance in a bad position, and experts in financial regulation and worried that Binance's KYC and security systems can be so easily manipulated.
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What do you think about this discovery?
Binance should stop utilization of its platform without KYC verification. It was a small attack when whole trading stopped on Binance last night.