How Bitcoin & Crypto Exchange KYC Could Be The Next Ledger Leak
A leak of crypto cold storage wallet manufacturer Ledger’s customer database has put over a quarter of a million Bitcoin and altcoin investors at serious risk. Some have had accounts drained, while others have experienced extreme threats of harm directed to their families and homes.
The situation sheds a light on a serious issue plaguing the cryptocurrency industry, and that issue is personal data privacy and security. As investors are now encouraged to put as much effort into personal data security as they do in protecting their assets, the fact that KYC is enforced on cryptocurrency exchanges means that this risk will never completely disappear. Here’s why KYC could be the source of the next major leak.
Not Your Keys, Not Your Bitcoin. Not Your Personal Data, Either
Even new crypto investors understand the importance of keeping cryptocurrencies off of exchanges and moving them into cold storage for safe-keeping. Ledger, a cold storage manufacturer offers solutions to serve this need for digital asset safety and security.
By moving Bitcoin and altcoins offline to a device not connected to the internet, digital assets are safely stored and out of the reach of cybercriminals.
But what Ledger users are now learning, is that although cybercriminals can’t touch the crypto stored on the device, real-world criminals can use private and personal data extracted from Ledger’s customer database to threaten physical harm if Bitcoin and other assets aren’t promptly turned over.
A story just broke involving a Reddit user who was threatened by a self-proclaimed meth addict demanding a ransom in XMR, or else they would kidnap them and murder their family members found at the user’s place of residence.
Authorities have been contacted in this case, but a company responsible for selling safety and security has instead put its customers in grave danger.
Altcoin is defined as any cryptocurrency except for Bitcoin. “Altcoin” is a combination of two words: “alternative Bitcoin” or “alternative coin”. There are over 1,500 altcoins with many more planned for release.
Why Personal Opsec And Privacy Is Useless In A World Of Crypto Exchange KYC
Crypto market vets have spoken out that these users should have realized that part of protecting their Bitcoin and altcoins also includes personal data privacy and strong personal opsec.
But at the same time, companies need to be far more responsible in preventing situations like this from occurring and should purge customer data periodically.
And if sensitive personal data such as name, address, phone number, must be kept totally private at all times, then what then do investors do about cryptocurrency exchange KYC?
More than a year ago, even Binance was claimed to have had its customer KYC data leaked, which included not only identifying info like name or address but ID documentation as well. Such data exposure can lead to identity theft, digital asset theft, hacks, and more.
Due to government regulations, customers in the US are especially vulnerable due to how much personal info is demanded. Consumers are forced to either forget crypto entirely, secure it through unorthodox means which also carries risk, or stick to the mandatory requirements that put them at risk.
There’s no telling how the KYC data is stored, or if it is the company or a third-party management solution handling it. In an industry built on trust, transparency, privacy, and decentralization, intervention from the state and negligence from centralized corporations combined with human error and weak security infrastructure will keep personal data at risk for years to come.