Identity fraud attempts double as Bitcoin price surges

Onfido research says ‘the crypto market is a natural target’

Posted 10 March 2021 by Christine Horton

New data from Onfido shows the number of identity fraud attempts has doubled year-on-year in tandem with the 5X year-on-year surge in Bitcoin’s price.

Over the past 12 months, the pandemic has driven a surge in fraudsters, with the recent Onfido Identity Fraud report revealing identity fraud increased 41 percent over the previous year. The crypto market has emerged as a regular target.

“The pandemic has led to a significant rise in unsophisticated identity fraud as first-timers look to take advantage of unsuspecting victims using digital services from home. Digitally native, the crypto market is a natural target,” said Dimitrie Dorgan, senior document specialist at Onfido. 

“With the surge in Bitcoin price, some investors are becoming millionaires overnight, making crypto increasingly attractive for first-time fraudsters. It is critical that crypto trading platforms have strong customer identity and authentication techniques in place – allowing legitimate users to trade freely without fear of falling victim to bad actors or enabling fraudsters to impersonate genuine users.”

A 2020 study by crypto intelligence firm CipherTrace found that over half of the world’s cryptocurrency exchanges have weak or deficient customer identification and Know Your Customer (KYC) processes in place. Onfido says that as the market continues to rise in popularity with retail investors, trading and management platforms must protect their users with robust KYC and anti-money laundering processes.

Onfido adds that it supports several global cryptocurrency marketplaces “by strengthening their KYC processes and enabling a secure environment for trading, without hampering the user experience for digital coin traders.”

It points to its Onfido Identity Verification solution, where users take a photo of their legal ID and a selfie or live video. It then conducts AI-powered document analysis and biometric authentication to confirm the person presenting the identity is its legitimate owner and is physically present.