KYC is meant to ensure that the cryptocurrency exchanges are well aware of who they are dealing with.  All it takes to track someone is a copy of the identification card, a utility bill, and a selfie.  The purpose is money laundering.  There are widespread concerns about the cryptocurrencies being used for money laundering.

A press release recently read thus, “Europol has supported Spain in dismantling a criminal organization providing large-scale crypto money laundering services to other criminal organizations.”

The money laundering activity consisted of doing a series of activities in a way to hide the illegal origin of the proceeds. They do it vide a Modi Operandi.  The common method identified consisted of splitting a significant amount into smaller sums to prevent suspicious transaction tracking.

The Guardia Civil, the Spanish Civil Guard, arrested nearly eight people and charged them for involving in money laundering.  The criminal organization reportedly operated two cryptocurrency exchanges and two crypto ATMs to help to deposit illegal cash and to convert them into cryptocurrency for other criminal groups. Cash carriers, smurfing techniques, depositing money in different accounts operated by the organization before ultimately exchanging money in the cryptocurrency.  The operation involved Guatuzo also supported by Europol.

This is one of the significant reasons for why even newer tokens like TCAT tokens are looking to get the KYC of their customers.

Several cryptocurrency enthusiasts resist KYC as they feel that privacy is eroded in the modern era. For issues related to privacy, they opine that it is not right on the part of the government to ask for KYC.  Privacy Advocates have forever been in a cat and mouse game with governments concerning cryptocurrencies.

KYC is considered essential to provide for firm banking relationships.  This also offers for improving the functionality of the exchange providing for smoother transfer of funds. KYC facilitates recovering stolen funds.  In cases where the investors lose their vital information like the private keys, in the absence of the KYC, it is not easy to prove ownership.

Cyrus R. Vance, Jr., Manhattan District Attorney, stated, “These defendants raked in crypto and cash worth millions on their full-service website that sold prescription-free counterfeit steroids and other controlled substances to customers in all 50 states.”

For normal cryptocurrency users, KYC provides for a sense of security. For privacy advocates, there are privacy risk issues with KYC for cryptocurrency.  KYC is a legal necessity for any business to operate lawfully.  The ideals differ between people.