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Coinbase leak prompts KYC criticism from crypto execs
By: protos|2025/05/16 03:00:09
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Crypto execs on X are calling for know-your-customer (KYC) protocols to be scrapped after leading US exchange Coinbase disclosed that its staff had accepted bribes and leaked users’ personal data.The leak, shared by Coinbase on Thursday and documented in a K-8 filing, revealed how overseas support staff were corrupted by bad actors into stealing information, including home addresses, government IDs, and bank account details.This data was then leaked to individuals for use in social engineering scams designed to steal user funds, which may cost Coinbase between $180 million and $400 million in reimbursements.To add to Coinbase’s troubles, the Securities and Exchange Commission is now reportedly investigating whether the firm exaggerated its user numbers.In response to the leak, the CEO of crypto analytics firm Nansen, Alex Svanevik, called for Donald Trump to “dismantle” the KYC and anti-money-laundering (AML) “complex.” Coinbase just proved again why centralized data honeypots are a disaster waiting to happen. KYC means handing over your identity to be leaked, sold, or extorted.The combination of data exposed here (real life addresses, crypto addresses and amount and real life id documents) is... pic.twitter.com/ZeOwpChZxO— Lefteris Karapetsas (@LefterisJP) May 15, 2025Read more: Coinbase says staff leaked customer data, refuses to pay $20M ransomKYC checks involve verifying a user’s identity via various pieces of documentation. This can include government IDs, passports, and utility bills.However, Svanevik says, “All [KYC] does is compromise personal data for regular people — at an immense cost.” He also claims that “practically no real criminals are caught.”Coinbase leak puts KYC in the limelight Svanevik is one of a number of high-profile crypto proponents criticizing KYC measures. Indeed, Wintermute CEO Evgeny Gaevoy said that Coinbase not disclosing the leak sooner is “the dark side of the idiotic and nonsensical KYC/AML regime we live in.”Bitcoin wallet firm Nunchuk_io, meanwhile, responded by calling KYC a disaster that “can happen to anyone.”Nick Neuman, the CEO of wallet firm Casa, said, “This is why we don’t collect KYC by default.” He added, “It’s one more attack vector for people to use against you.”Crypto sleuth ZachXBT has also criticized KYC protections in the past, and highlighted how criminals are able to buy accounts fitted with verified KYC credentials in order to bypass checks.In 2023, Europol shuttered a criminal marketplace that sold the KYC credentials of over 2 million people. Some, however, like Gaevoy, believe KYC can still exist in the form of zero-knowledge proofs, a crypto-based technology that allows information to be verified without revealing the actual information enclosed. Got a tip? Send us an email securely via Protos Leaks. For more informed news, follow us on X, Bluesky, and Google News, or subscribe to our YouTube channel.The post Coinbase leak prompts KYC criticism from crypto execs appeared first on Protos.
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