finbold.com
In order to trade cryptocurrencies using some of the major crypto markets, investors must go through a “Know Your Customer” (KYC) verification step and provide a valid identification (ID) document.
However, technological advancements in artificial intelligence (AI) could threaten this current model. A new AI-based tool now allows people to create realistic fake IDs within minutes for $15, as reported by 404 Media.
Interestingly, Joseph Cox, co-founder of 404 Media and journalist, tested the tool and successfully bypassed the verification check on OKX.
“Massive implications for crime and cybersecurity.”
– Joseph Cox
Cryptocurrency exchanges, like Kraken, have commented about measures to prevent users from bypassing verification with AI-generated fake IDs. Other players in the industry are also considering using longer and more complex KYC methods, such as real-time video calls.
All in all, honest users might face more challenges in properly accessing high-liquidity markets to buy and sell cryptocurrencies. The verification requirements also expose these people to data leaks, which makes some decide to avoid these services.
In the meantime, criminals or people who do not care about following these strict rules are not prevented from their actions, backed by technological advancement, creativity, and the proper incentives.
As usual, the industry and the market must adapt and change. Nevertheless, it is important to understand that faking IDs is a crime in all jurisdictions. Therefore, service providers and users might face legal action against their attempts to bypass KYC mechanisms.