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Coinbase updates its KYC and now asks for bank statements to trade bitcoin

“Worse than the FBI and the US Internal Revenue Service combined.” That is the criticism of users who, when trying to operate with bitcoin on the centralized exchange Coinbase, find a series of requirements and requests that are more reminiscent of a bank than a cryptocurrency exchange.

Via Twitter, Mira Christanto, who is a researcher at the market analysis firm Messari, reproached that due to the update of Coinbase’s ‘know your customer’ (KYC) policies, account statements are now requested banking from at least three months ago. It is also asked to explain when did you start trading cryptocurrencies and even how much profit has accrued as a result of that.

Quite excessive. Regulated entities may want only a bank statement, no proof of funds is required, there is no explanation as to when you entered the crypto market or how your wealth has increased as a result. You don’t need to add how many other passports you have (if any) in addition to the ID you are submitting.

Mira Christanto, a researcher at the market analysis firm Messari.

He also shared an image where several of the requirements demanded by Coinbase are read to start using the platform. The requests range from giving details about the current (and past) occupation, salary certificates, to informing if they have cryptocurrencies in other digital wallets.

But it’s true?

To confirm the information, . searched among the privacy policies and terms of the company. We achieve that, among the personal information requested, is the one that has to do with the financial part, in the Privacy section of the official website of the exchange.

There, they admit that bank information is requested, such as the name of the bank, the type of account, the routing number, the account number itself, and the transaction history.

As they clarify, the company will request such data “only to the extent necessary to comply with its legal or contractual obligations.” In addition, they maintain that they are subject to the US Bank Secrecy Act (BSA).

Besides, they talk about requesting names, dates of birth, nationality, sex, utility bills, photographs, phone numbers, ID, passports, driver’s licenses (with their details). They also request another needed information to comply with its legal obligations “under financial or anti-money laundering laws.”

They even ask to report on the transactions carried out on the exchange’s servicessuch as the recipient’s name, the sender’s name, and the amount.

Although they do not clarify that everything is part of the KYC requirements, much of the information shown by Christanto is validated on the same Coinbase website.

The KYC requirements that Coinbase requires to buy and sell cryptocurrencies / Source: Mira Christanto.

Harsh criticism in networks

Christanto wasn’t the only one to criticize Coinbase’s new KYC. On twitter, several users shared their discomfort with the new process and classified it as excessive, since it can take up to three days, when before it was completed in a few minutes.

One user asserted that Coinbase, one of the publicly traded exchanges, caused retail to be influenced by the FOMO (Fear Of Missing Out), which led to the creation of new accounts, the which, now, They cannot trade with other people due to KYC requirements.

Another person questioned the exchange: “Either it is the most irresponsible KYC exchange on the planet, by not enabling load balancing servers, or it is doing it deliberately on purpose, to prevent people from liquidating their profits.”

Another went further and recommended move away from Coinbase and other centralized exchanges, like Binance and Kraken, because “they will be hacked or they will hand over the data at a given moment.” “KYC is evil and should be avoided,” he coined.

Big moves from Coinbase

After Coinbase’s conditioning to continue operating became viral, large sums of bitcoin have been mobilized from that exchange to other unknown wallets, according to what the Whale Alert monitor on Twitter reports.

For example, at 5 p.m. (UTC) this Friday, a transfer of 5,500 BTC, or $ 347,122,129, from Coinbase to an unregistered wallet.

In another movement 938 bitcoins, or $ 58,368,151, was transferred from that wallet to Binance. Others 415 BTC, or just over $ 25 million, was taken from Coinbase to an unknown wallet.

And today, others 1,699 BTC (USD 103,273,476) were moved from Coinbase to an unknown wallet, as another evidence of a migration, perhaps fortuitous, to other exchanges that do not have so many KYC requests.

Coinbase will request names, dates of birth, nationality, gender, utility bills and other documents / Source: Coinbase.

Beware of hackers

The KYC update on Coinbase, which involves giving sensitive information to a company, may be a double-edged sword, especially for the hacking background reported by the exchange.

In fact, the last one was at the beginning of the month, when Coinbase suffered an attack, the product of a failure in the authentication system, and that charged the cryptocurrencies of, at least, 6,000 users, as this newspaper reported.

Although the company reported that it was replenishing stolen funds, the truth is that the security of the exchange house was compromised, so, beyond updating the KYC, there should be a reinforcement in the the company’s ability to stop these attacks.

About the author

Donna Miller

Donna is one of the oldest contributors of Gruntstuff and she has a unique perspective with regards to Science which makes her write news from the Science field. She aims to empower the readers with the delivery of apt factual analysis of various news pieces from Science. Donna has 3.5 years of experience in news-based content creation, and she is now an expert at it. She loves journalism, and that is the reason, she moved from a web content writer to a News writer, and she is loving it. She is a fun-loving woman who has very good connections with every team member. She makes the working environment cheerful which improves the team’s work productivity.

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