$75 for a KYC ID – Chinese Crypto Investors Find their Way into Binance Launchpad Projects
The second project offered on Binance Launchpad has fared a similar frenzy as the first BitTorrent Token (BTT) initial coin offering (ICO) on the platform – over 69 million FET snapped up in 22 seconds.
Launched at 22:00 (UTC+8) Feb. 25, Fetch.AI (FET) was the second project featured on Binance Launchpad after BitTorrent, which hit a success with $7 million worth of BTT tokens sold in less than 20 minutes earlier this year and the price of BTT having surged by 6 times from its ICO price.
24000 people pre-signed the User Agreement, 19860 people successfully submitted a buy order, 2758 people got a piece. The first 22 seconds (not 10). https://t.co/eVQy741bhO
— CZ Binance (@cz_binance) February 25, 2019
Considering the success of the first ICO project on the platform, crypto investors showed great interests in FET. Still, a lot of investors who failed to buy BTT tokens found they failed to get a FET this time again because of the overwhelming interest. Only 2,758 people got a piece among the 19,860 participants, of which many are Chinese investors despite the fact that fervent users in China were not allowed to participate in this token sale held on the platform for compliance issues.
Where there is a “will”, there is a “way”
These Chinese crypto investors are not hampered by the exchange’s prohibition and could still get in the public sale by some means. According to a local report, some sophisticated businessmen in China could provide “KYC services” for crypto investors and even software boasted to accelerate their purchasing speed.
“500 yuan ($75) for a valid KYC identity, which allows you to participate in all the following public sale projects on Binance.”
“Will provide an image of identification card (two-sided), an image of the person holding the ID card and a paper on which to-day’s date is marked.”
“The identity pictures from Philippines are shoot on site, and identities from other countries like Russia, German, France, Italy and England are mostly bought from hackers.”
The KYC (Know Your Customer) procedure requires validating users’ identification in person, and a foreign passport is not accepted as valid ones in crypto exchanges. If users want to buy cryptos in the Binance exchange, they have to submit their identity documentation to go through the verification process like the cases in most banks; and for Binance Launchpad projects, users from the following jurisdictions were not allowed to participate in its token sale:
Afghanistan, Albania, Belarus, Bosnia & Herzegovina, Burundi, Central African Republic, Cote dIvoire, Cuba, Democratic Republic of the Congo, Ethiopia, Guinea, Guinea-Bissau, Iran, Iraq, Lebanon, Liberia, Libya, Mainland China, Malaysia, Myanmar (Burma), North Korea, Republic of Macedonia (FYROM), Serbia, Somalia, South Sudan, Sri Lanka, Sudan, Syria, Thailand, Trinidad & Tobago, Tunisia, Uganda, Ukraine, United States of America (USA), Venezuela, Yemen, Zimbabwe
In this context, some tricky Chinese figured out this way to help crypto investors circumvent the inability – buy valid identity information from residents in those permitted countries or directly from hackers, and sell them to individual investors in need of it. After submitting the identity documentation bought this way, an investor then will use CrazyTalk, a face animation and lip-sync software, to “change his face” to the one on the documentation to complete the following video verification part.
Binance effect or a “real” project?
Though the process is complicated and has risks as identity sellers can deliberately trigger risk control and use his real ID and face to transfer the cryptoassets out from “his” account, there’re still plenty of people willing to take the risk in China.
A footage shows that a room of people in a Chinese internet café was hired to buy the FET token, on which a Twitter user commented, “although there are over 2500 accounts who got FET tokens but in reality maybe only 10 people have control over the whole supply.”
— Alexandre Dreyfus (@alex_dreyfus) February 25, 2019
Apart from that, the FET project, founded in 2016, updated its Github repository only 5 times in the past three years. Some investors in China allege the project is centralized and maybe another pump-and-dump game as the team could control up to 70% of the tokens. The FET project claims to bring together ‘machine learning, artificial intelligence, multi-agent systems and decentralized ledger technology to create an economic internet’.