Investing in blockchain development teams brings industry-specific risks compared to regular startups, however, they get remotely entrusted with millions of dollars, often with limited verification.
In order to create the next-level security layer, reconcile the privacy of crypto developers while also gaining the trust of investors, we have created the CertiK KYC Badge. This new process specializes in enhanced due diligence and investigation techniques that goes far beyond the traditional KYC.
Here are the top 5 differences between a regular KYC and the CertiK KYC program:
The goal of a regular KYC (for banks, exchanges, etc) is to comply with minimum regulatory requirements, i.e. to collect your name and address, and verify that your name is not on a government’s blacklist. The simplicity of this process means it can be easily falsified, by either using a fake ID, or by asking someone else to complete the KYC.
While a single ID check can suffice when authorizing someone to open a bank account, it is certainly not enough to entrust a crypto team with millions of dollars. The objective of the CertiK KYC is to thoroughly verify the team behind the project across many avenues unique to Web3, and create a level of transparency and accountability that is proportional to the amount of funds at stake.
The level of verification of a standard KYC is relatively low, and can be easily bypassed by anyone who is planning to do a rugpull, an insider hack, or any other scams intended to steal funds from investors.
To combat this, CertiK has hired a team of law enforcement investigators and military intelligence analysts to create a unique, thorough investigation and verification process. Their goal is to reach and maintain the highest level of due diligence, and carry out a complete verification, not only of the code and the on-chain data of the project, but also of the team members. In order to effectively vet the best crypto teams, CertiK has adapted the background investigation methodology, which is traditionally used to grant security clearances to law enforcement agents and military officers.
Since malicious team members can easily ask someone else to complete the KYC for them, ensuring they remain completely anonymous when they conduct their crime (e.g. rug pull), the best way to stop a malicious crypto project is to detect it early, i.e. during the preparation phase, before it even happens.
Thanks to its highest level of verification and investigation on the market, CertiK has been able to detect professional “KYC for hire” actors, hidden team members, fake documents, rogue developers, devs who concealed the fact that they participated in prior fraudulent projects or rugpulls, and multiple malicious teams whose sole intent was to run a fake project in order to collect cash for fraudulent gain. This ability to detect malicious teams very early brings great value, because it allows institutions and investors to save both time and money, and focus their attention on legitimate projects and teams.
A full audit of the entire project team, with enhanced due diligence and professional background investigations, provides a useful guarantee for multiple parties. Project owners can use the verification process internally, to vet their remote developers, and externally, to provide a demonstration of trustworthiness and accountability to their investors and community.
Investors can use it to ensure they screen out malicious teams who apply for funds. Partners can use it to eliminate project teams that could potentially damage their reputation. Team members can rely on the protection of their personal information and their privacy. And finally, communities can use CertiK to ensure that in case of fraud, a complete on-chain and off-chain investigative report will be directly shared with the appropriate law enforcement authorities, to ensure they have all the information they need to prosecute the criminals.
Initially, the CertiK KYC Badge was only intended to serve as a verifiable proof of transparency and accountability on the Security Leaderboard. It has become recognized as the most thorough due diligence and vetting process in the crypto industry. Therefore, centralized exchanges, decentralized exchanges and launchpads have begun to use it as a reference and/or a requirement. This means that successfully obtaining the CertiK KYC Badge has become a way to get noticed by these big institutions.
CertiK KYC-Due Diligence as a service is also now requested by VC's who ask CertiK to identify and present them shortlists of promising crypto teams, and vet them before they invest. CertiK KYC and Due Diligence has become an efficient selective process to match the best development teams with the biggest VCs and platforms.
As you have now learned, a regular KYC, like a fake KYC certificate, has no real value in the crypto industry because it can be easily fabricated by a malicious development team. This is exactly what inspired CertiK to create a totally new and comprehensive enhanced due diligence process, developed by a team of law enforcement and military intelligence specialists.
Our KYC and enhanced due diligence offers the highest level of verification on the market and allows for the early detection of potential threats. This brings a higher level of confidence in projects, as well as more visibility in order to match the best development teams with the VCs and exchanges looking for the next gem.