Know Your Customer (KYC) and Know Your Transaction (KYT) are ostensibly deployed by exchanges to combat money laundering. In practice, these provisions are used as an excuse to surveil, cajole, and threaten customers, who risk losing funds if they are unable to meet the impossibly high burden of proof. An investigation by news.Bitcoin.com suggests that tokenized securities exchange Currency.com is complicit in such behavior.
Locked, Stocks, and Two Smoking Barrels
“My funds are stuck on Currency.com. They say I need to prove origin of funds and are refusing to release them. Can u investigate?” So read the anguished Telegram message I received from a cryptocurrency trader last month. News.Bitcoin.com does not have a mandate to investigate hard luck stories; we are a news organization, after all, not customer support. However, I had a connection of sorts with Currency.com, having previewed the crypto-powered stock exchange in January last year and interviewed its CEO Ivan Gowan.
Knowing that KYC/KYT abuses are on the rise, and already possessing a Currency.com account, I decided to try and replicate the trader’s fate. What I found raises serious questions about the integrity of Currency.com and the entire ‘surveillance exchange’ industry upon which KYC is founded. Unable to meet the unreasonable demands arbitrarily thrust upon them, traders are being locked out of exchanges that have unblinkingly accepted their funds only to refuse to return them.
Know Your Transaction is the KYC of blockchain, a policy which places the onus on customers to prove their funds are clean. This is of course an impossibility,