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Crypto Traders Seek to Prepare Blacklist to Prevent Frauds

Crypto Traders is considering to prepare a blacklist of counterparties engaged in suspicious activities, according to a Bloomberg report.

Traders from 35 digital asset exchanges, including DRW Holdings Inc.’s Cumberland crypto unit, Mike Novogratz’s Galaxy Digital Holdings, and Ripple, gathered in Chicago on Tuesday to discuss the move.

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The group also discussed an alternative proposal to establish accreditation of firms with a good reputation in the community as approved by a loose association of crypto businesses known as the Crypto OTC Roundtable Asia (CORA).

“A community-wide effort to improve compliance standards would prevent liabilities that might stem from trading with bad actors or dealers that trade with bad actors,” Darius Sit, managing partner at Singapore-based crypto trading firm QCP Capital, told Bloomberg. “A self-governance initiative like this is also something that regulators are keen to see.”

A standard KYC procedure

The participants also discussed the present KYC processes followed by the exchanges and suggested a common standard for verification of the identity and source of funds.

In recent years, the crypto trading industry attracted a hoard of traders from Wall Street while institutional investors are also slowly moving towards the sector. However, the lack of proper regulations like the traditional stock markets also created a perfect market for malicious traders to manipulate.

The prospect of creating a blacklist is not an easy task as it involves a ton of legal and technical difficulties. Mentioning the roadblocks of such an initiative, Vishal Shah, senior trader at Greenwich and a participant of the gathering, told the publication: “Such occurrences are unique and frequent, making a standardized implementation of a blacklist tough. There is also the question of legality, and on the cover, it looks more sinister than its intent.”

Crypto trading platforms, big or small, have always been a lucrative target for hackers and fraudsters. Binance, one of the largest crypto exchange in terms of trading volume, was recently attacked and lost 7,000 Bitcoins worth around $40.7 million at the time.


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