Crypto Traders Seek to Prepare Blacklist to Prevent Frauds

Crypto Traders is considering to prepare a blacklist of counterparties engaged in suspicious activities, according to a Bloomberg report.

Traders from 35 digital asset exchanges, including DRW Holdings Inc.’s Cumberland crypto unit, Mike Novogratz’s Galaxy Digital Holdings, and Ripple , gathered in Chicago on Tuesday to discuss the move.

The group also discussed an alternative proposal to establish accreditation of firms with a good reputation in the community as approved by a loose association of crypto businesses known as the Crypto OTC Roundtable Asia (CORA).

“A community-wide effort to improve compliance standards would prevent liabilities that might stem from trading with bad actors or dealers that trade with bad actors,” Darius Sit, managing partner at Singapore-based crypto trading firm QCP Capital, told Bloomberg. “A self-governance initiative like this is also something that regulators are keen to see.”

A standard KYC procedure

The participants also discussed the present KYC processes followed by the exchanges and suggested a common standard for verification of the identity and source of funds.

In recent years, the crypto trading industry attracted a hoard of traders from Wall Street while institutional investors are also slowly moving towards the sector. However, the lack of proper regulations like the traditional stock markets also created a perfect market for malicious traders to manipulate.

The prospect of creating a blacklist is not an easy task as it involves a ton of legal and technical difficulties. Mentioning the roadblocks of such an initiative, Vishal Shah, senior trader at Greenwich and a participant of the gathering, told the publication: “Such occurrences are unique and frequent, making a standardized implementation of a blacklist tough. There is also the question of legality, and on the cover, it looks more sinister than its intent.”

Crypto trading platforms, big or small, have always been a lucrative target for hackers and fraudsters. Binance, one of the largest crypto Exchange in terms of trading volume, was recently attacked and lost 7,000 Bitcoins worth around $40.7 million at the time.

Crypto Traders is considering to prepare a blacklist of counterparties engaged in suspicious activities, according to a Bloomberg report.

A standard KYC procedure

The participants also discussed the present KYC processes followed by the exchanges and suggested a common standard for verification of the identity and source of funds.