Hello RugDoc fam,
It’s been a little while and we need to sit down and talk about the elephant in the room… The Know Your Customer (KYC) program.
Recently there’s been an increased demand and criticism for this particular service and we wanted to take the time to explain the process and why it’s important for projects to KYC.
We’ve also come armed with examples to substantiate our rationale in our approach, so we’d like to take a few minutes of your time to explain a couple of things.
First off…
What is RugDoc’s KYC Program?
The KYC program is a beta that we added to our suite of services due to popular demand from the community.
RugDoc KYC gives project developers the option to partake in our extensive vetting process in order to prove ownership and hold a semblance of accountability should any malicious actions occur.
Our aim is to de-anonymize developers. The KYC program act as a deterrent and helps prevent any malicious action from the developers.
However, this is not a guarantee for safety, nor does this make RugDoc liable for any financial losses that investors may incur.
The RugDoc KYC Process
While KYC is available with other providers, we do offer a unique proposition specifically relating to DeFi to provide an extra layer of security.
The process contains the following:
- Manual verification via a Zoom call of KYC document and applicant. This is essential to make sure that the applicant and document they submit are both legitimate and matching. We are aware synthetic media is possible (e.g. DeepFake), however we will do our best to remain vigilant and part of the reason that this is still done manually.
- Prove access to project’s deployer or team wallet to show that they indeed have top level access in the project and are 100% responsible for anything done with that address.
- Confirm that they are the ONLY person with access to this address, or every other person with access must also KYC.
- Make a small transaction to a specific address on video to prove proof of ownership (refundable).
Our KYC process has elements of solidity programming which is necessary to take extra steps of precaution.
As far as we are aware, no other KYC provider offers this level of depth as we do.
We’re in quite a niche position in DeFi where we have willing members of staff to manually verify identities and also verify contract ownership.
On a typical project, hiring solidity developers will cost you at minimum of $5,000 and onwards to help you verify some of the KYC steps we ask for. We are aware not your everyday DeFi investor can afford this, which is a primary reason why we’re offering this service for project owners at RugDoc.
Want more information? Check it out more KYC details here.
Why should Projects KYC?
We get a fair amount of criticism around the costs for KYC, However as a DeFi project hoping to get 6-7 figure TVL, this should be a miniscule amount to cover and should be part of the essential operating costs to spread some sense of security in the project.
Any malicious actions from the KYC’ed applicant can be prosecuted with legal action, so developers undergoing the KYC process show the first steps towards transparency.
Doxxed teams via public media pieces (e.g. Youtube videos), published LinkedIn profiles, and similar formats where developer names and faces are shared can and often times be faked, which is why we’re keen to follow the process outlined… especially as it contains a step which caters specifically for Contract ownership.
Below are some examples of where we can see the impact of identities being shared both positively and negatively.
Identity and Action – StableMagnet
A DeFi project called StableMagnet exit scammed for $22 million in June 2021.
While this project was not KYC’ed, we did have vigilant community members that investigated the StableMagnet team using small breadcrumbs left behind by the Scammers.
This allowed “Ogle”, founder of BSC Gemz as well as “Dingbats” a well respected Solidity freelancer to track down the movements of the StableMagnet team as well as their identities.
The StableMagnet team, after executing the scam, moved from Hong Kong to Manchester, UK where they were arrested by the authorities. This is a prime example of which revealed identities is paramount to tracking culprits as well as making recovery a possibility.
We have made a video to outline the story here:
Identity and Witch Hunting – Little Doge NFT
One of the things we are steadfast in is that we will never release KYC’ed data to the public, as this enables witch hunting. In essence, modern-day witch hunting is when online users threaten or even take negative action that can harm a KYC’ed person’s life.
This might happen if something in a project goes wrong – such as if a project were to be exploited. As you can imagine, witch hunting is something we are very much opposed to.
We firmly believe that cyber crime units are best versed to tackle these situations rather than the public who will be armed with pitchforks and filled with emotions.
Little Doge NFT is a project that rugged for $1m. With a hyper-vigilant and aggressive community, they found multiple members of the group and expressed some hateful and quite frankly disgusting comments towards them and their family. Comments relating to arson, death threats, and rape towards their loved ones were mentioned.
We do not encourage this behavior and firmly believe that addressing KYC issues by involving authorities is a much better approach than letting the outraged community run rampant as evident in the above.
In progress – CryptoYieldFarm (CYF)
Out of the 30 KYC’ed projects so far we have at RugDoc, there has only been one instance of overt malicious behavior, and that’s with CryptoYieldFarm. We have the culprit’s full name, date of birth, address and other details, which we will use to file a report with the local authorities.
If you were affected by this scam, please reach out to @TheRugDoctor as we are compiling transactions to be provided as evidence. In the meantime, please remain vigilant when investing and manage your risk appropriately.
You can also head over to the CYF Support Telegram if you were affected by this project.
I also wanted to quickly add that there are other providers for KYC and LP locking that project owners are free to use. We are encouraging projects to KYC and lock their LP – not necessarily with RugDoc, but with any reputable provider.
As vigilant investors, we encourage you to put pressure on the project to lock their LP and undergo a KYC process for the reasons outlined above
RugDoc is about DeFi safety. We are not vigilantes that hunt down scammers, and we will continue to do what we do best, which is to continue and educate the community through building our Wiki DeFi database.
We are also continuing our free review of DeFi yield farms and establish new partnerships with reputable projects such as Avalanche Network and Paladin.
While we are saddened that the RugDoc KYC did not deter CYF from scamming, we are hopeful and enthusiastic to support local authorities in their prosecution.
Stay safe out there,
Limitless
