Investigator Questions Huobi Global's KYC Policies

Concerns Over Huobi's KYC Practices

Aurelius Capital Value has raised significant concerns regarding Silvergate's partnership with Huobi Global, labeling the latter as a lax-KYC offshore exchange. This concern stems from Huobi's inadequate Know Your Customer (KYC) standards, which were highlighted in a 2020 experiment by a forensics company. The experiment revealed that creating false accounts on Huobi was alarmingly easy, using altered photographs of celebrities as identification.

Implications of Lax Controls

The investigation further uncovered that Huobi Global failed to address its connections to the darknet marketplace Hydra. This lack of action raises alarm over the exchange's compliance with Anti-Money Laundering (AML) procedures. The inability to align Huobi’s onboarding process with Silvergate's rigorous due diligence has only intensified these concerns.

Allegations and Risks

Huobi has been accused of facilitating criminal activities, including money laundering by North Korea's Lazarus group. These allegations highlight the significant risks associated with lax KYC policies. Furthermore, Justin Sun, linked to Huobi, faces accusations of insider trading and is reportedly under investigation by the FBI for money laundering.

Conclusion

The scrutiny over Huobi Global underscores the critical importance of robust KYC and AML practices in the cryptocurrency industry. The partnership with Silvergate is now under question, emphasizing the need for stringent compliance standards to prevent illicit activities and maintain trust in financial exchanges.