The crypto derivatives firm based in Seychelles, Digitex, has decided to remove KYC altogether as their immediate response to the recent major user data breach that attacked them last month. While other globally operating crypto exchange further amplifies their Know Your Customer (KYC) rules, Digitex believes that crypto platforms do not need it at all.
The CEO of Digitex Futures Exchange, Adam Todd, officially announced the news by way of a public video statement that released this March 4. Within the said statement, Digitex relayed to the world that they plan to indeed remove the entirety of KYC identification processes within their operation, starting April 2020.
Adam Todd clarifies that users will no longer need to do KYC in order to purchase Digitex tokens from within their treasury. He added that starting April, KYC identity verification requirements on the platform will cease altogether. According to him, the removal of KYC is the only viable way for Digitex to guarantee that no leakage of personal documents would happen again as the platform does not have such documents at all.
As of the moment, Digitex is still running its beta version, which only allows its users to buy their digital token, DGTX. After the said mainnet launches this April 27, users will now be allowed more freedom as they may now trade DGTX and Ether (ETH), on top of other cryptocurrencies. However, Todd noted that the firm has no plans to offer support towards fiat currencies as of the moment.
The personal data breach that compromised 8,000 Digitex users
As mentioned briefly above, Digitex’s decision to remove KYC is their response to the significant user data breach that attacked the exchange just recently. It was identified that an ex-employee of the firm was the one responsible for the said leakage. He has reportedly been able to steal KYC documents, such as scans of user driving licenses and passports of more than 8,000 customers.
Though trusted sources claim that the “Digileaker” is indeed an ex-employee of Digitex, some reports say otherwise. They say that the suspect is neither an ex-employee nor someone from Digitex’s or Adam’s past.
On a March 2 public statement by Digitex, they explained that they were only aware of the email data leakage at the start. They then admitted that, however, it was a second – unexpected – breach that eventually caused the compromise of several sensitive data.
An official speaking directly for the exchange elaborated that there were at least five unfortunate users who had their government-issued IDs leaked. That being said, as the perpetrator, the “Digileaker,” claims that he possesses more than 8,000 user documents; Digitex has yet to confirm whether this is indeed the case or just an elaborate bluff. Investigations are still active.
Digitex’s real opinion towards KYC rules
Digitex has already hinted at the potential elimination of KYC requirements within their operations before, and this recent incident amplified the firm’s CEO’s cynical take towards the general concept of KYC. According to his latest statement, he sees the major justifications behind the KYC rules, such as money laundering, are borderline stupid and genuinely ridiculous.
The CEO of Digitex explained that they have been trying to adopt KYC before as their answer for two significant issues – battling money laundering and to welcome US-based customers within the platform. However, with the recent major breach despite the implementation of KYC, such justifications are but worthless to them now, said Todd. He adds that such allegations that users are laundering cryptocurrencies such as DGTX and ETH to fund global terrorism is obviously “bullshit.”
Digitex, the United States, and KYC
With regards to the US government’s unwillingness to allow its citizens to exchange crypto through Digitex, the executive elaborates that the platform has indeed already blocked US IPs and is actively asking their users to confirm whether they are from the US as written within their terms and conditions. With that said, the US IP block on top of the strict terms and conditions should already be enough for a US user to be discouraged using Digitex. Todd then clarified that if they do detect a US user that violated the written terms and conditions, the exchange would them immediately remove his or her access within the platform and give them just a week to withdraw all their funds.
As to answer to the question of whether he thinks Digitex’s users would grow following the removal of KYC, Todd says yes. He noted that the KYC is a massive obstruction for a lot of people who would want to join crypto exchanges because lots of people all over the globe do not have government-issued IDs at all. He adds that KYC has been an enormous barrier for Digitex, and they prioritize people’s right to privacy more than anything else.
The very fact that Digitex fights the oversight of the Big Brother, itself, falls directly in line with the global increase for concern towards user privacy. More and more major players from within the industry urge the protection of online user privacy. As evidence of such sentiment, an executive of the big Blockchain and crypto analytics company, Chainalysis, speaks out his confidence that full transparency is not the way to go for the crypto industry. It is also worth mentioning that Chainalysis collaborates fully with major federal agencies such as the FBI and the Internal Revenue Service.