After Coinbase, OKX has been found to have lax customer verification (KYC) and anti-money laundering (AML) procedures. On the afternoon of February 5th, tech news journalist Joseph Cox from 404 Media discovered a serious vulnerability related to KYC and AML processes on the cryptocurrency exchange OKX.
As per Cox’s revelation, users could easily bypass OKX’s KYC/AML procedures using fake identification documents. This indicates that the exchange is downplaying the hidden risks behind loose user identification measures. However, the story takes a worse turn.
Immediately after receiving this information, Protos contacted OKX’s customer support on Telegram. An OKX staff member denied the claims made by Cox but revealed that there were no stringent KYC/AML procedures in place, even during account creation, deposit, and trading on OKX.
Furthermore, the customer support department admitted that they had no mechanism to completely remove dirty money from the platform. They claimed that KYC/AML procedures were only truly enforced when users wanted to withdraw funds from their accounts.
Interestingly, this department even stated that “this is how all exchanges worldwide operate, not just OKX.” However, when questioned about legality and ethics, they remained silent.
The customer identification process plays a crucial role in preventing fraudulent activities and money laundering. Typically, this process requires customers to provide various personal identification documents such as ID cards, passports, and other personal information. In simple terms, this procedure ensures that only legitimate individuals can use the platform’s services.
In the past, rival exchange Coinbase faced regulatory scrutiny from the New York authorities and was fined $50 million for neglecting KYC. Similar to OKX, Coinbase was found to allow users to register accounts without thorough verification, resulting in accusations of violating state anti-money laundering regulations.