- Aurelius Capital Value called Silvergate`s partnership with Huobi into doubt.
- Huobi has been labeled a lax-KYC offshore exchange.
- Variations in the strictness with which KYC and AML requirements result to slack in controls.
The public company investigator Aurelius Capital Value has cast doubt on Silvergate’s association with Huobi Global. This results from the establishment that Huobi Global has poor KYC standards. It was also a result of an experiment conducted in 2020 by the forensics company Cipherblade.
The experiment demonstrated how simple it was to create false accounts by using photographs of celebrities that had been altered using photo editing software as the ID photo. It was also discovered that Huobi Global had not taken any action against the links that were made between Huobi and the darknet marketplace Hydra.
In addition, the company was unable to find a way to harmonize the formal due diligence procedure that Silvergate uses with Huobi’s onboarding process.
Subsequently, Huobi has been labeled by Aurelius Capital Value as a lax-KYC offshore exchange where criminals, such as North Korea’s Lazarus, have laundered billions of dollars.
Justin Sun, who is accused of engaging in insider trading and who the FBI is allegedly investigating for money laundering, now serves as the CEO of Huobi. Aurelius reports that Sun collaborated with Silvergate Bank to establish the TRON stablecoin. Critics of the cryptocurrency pointed out that it had a weak technological foundation and a little value.
However, Sun strongly disputed the charges and warned of the prospect of a defamation action being brought against those who spread false rumors about him.
Amid all this, experts say that it is important to recognize that there are a number of causes for slack controls. These include variations in the strictness with which KYC and AML requirements are applied across jurisdictions.
Notably, exchanges with inadequate Know Your Customer (KYC) procedures and execution pose a risk to their customers’ reputations and facilitate illegal conduct.
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