Cryptocurrency exchanges are subject to regulations, including strict anti-money laundering (AML) requirements and the related “know your customer” (KYC) rule, but fake IDs allegedly passing the verification process can be purchased by hackers and fraudsters for $15.
Artificial intelligence potentially gives crypto hackers and fraudsters a new advantage. Fake IDs generated by artificial intelligence are now allegedly being used to deceive identity verification. Criminals can purportedly bypass identity checks easily.
The website OnlyFake, which claims to use neural networks and artificial intelligence generators to create fake driver’s licenses and passports, reportedly succeeded in passing Know Your Customer (KYC) checks on several crypto exchanges.
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The costs of creating fake documents capable of deceiving the identity verification process are laughably low, given the numerous multimillion-dollar or even billion-dollar scams and hacks. Only $15 each.
OnlyFake generates realistic fake driver’s licenses and passports from 26 countries, including the United States, Canada, the United Kingdom, Australia, and several European Union countries, and accepts payments in multiple cryptocurrencies through the commercial payment service Coinbase.
The snapshot of a fake British passport above was allegedly submitted to the identity verification system of OKX. Media company 404 Media reports:
In our own tests, OnlyFake created a highly convincing California driver’s license, complete with any name, biographical information, address, expiration date, and signature we wanted. The photo even gives the impression that the ID card is lying on a fluffy carpet, as if someone had placed it on the floor and photographed it, as many websites require for verification purposes. 404 Media then used another fake ID generated by this website to successfully pass the identity verification process on OKX.
The pseudonymous owner of OnlyFake, “John Wick,” told 404 Media that the IDs can bypass KYC checks on Binance, Kraken, Bybit, Huobi, Coinbase, and OKX exchanges, along with non-bank Revolut accepting cryptocurrencies.
Additionally, the OnlyFake website claims that it “does not produce counterfeit documents, as it is illegal.” Its terms state that “templates are intended for use in movies, TV shows [and] web illustrations.”
Meanwhile, OKX exchange has already commented on the incident, stating:
We are committed to aggressively combating fraudulent behavior on our platform and striving for the highest regulatory compliance standards. The abuse of artificial intelligence to conduct fraudulent activities is an evolving and cross-industry challenge that OKX is comprehensively addressing.
However, there is an increasingly clear message for lawmakers and regulators that this area requires a fundamental overhaul of current principles and regulations.
Identity verification by sending sensitive personal data and photos of personal documents to third-party servers not only becomes unreasonably risky in terms of potential data breaches but also reaches its limits with the development of technologies and potentially becomes ineffective.
Generating a fake document on the website takes less than a minute. OnlyFake also offers spoofing of image metadata, where users can falsify GPS location, date, time, and the device that allegedly took the photo, as some identity verification services check such data to determine authenticity.
In May 2022, Binance’s Chief Security Officer Jimmy Su stated that there had been an increase in scammers attempting to scam the KYC process of cryptocurrency exchanges using deep fake videos, warning that videos would soon be convincing enough to fool human operators.
At the end of 2022, blockchain security firm CertiK revealed an online black market of individuals selling their identity for just $8, agreeing to act as verified faces of fraudulent crypto projects and open banking and exchange accounts for criminal actors.
