Crypto KYC Violations: What Happens When You Break the Rules

When you use a crypto exchange, you’re not just trading coins—you’re entering a system that requires KYC, Know Your Customer, a legal process where exchanges verify your identity before letting you trade. Also known as identity verification, it’s not optional. If you skip it, fake it, or try to bypass it, you’re not just breaking terms—you’re risking your account, your money, and sometimes your freedom.

Exchanges like Coinroom, Unocoin, and Bitcorse all require KYC because of global rules like the Travel Rule, a FATF guideline that forces crypto platforms to share sender and receiver info for transactions over $1,000. Skip KYC, and you can’t comply. That’s why places like BitMEX, which used to allow anonymous trading, now block U.S. users entirely. Even in countries where crypto is loosely regulated—like India, China, or Nigeria—exchanges still enforce KYC to avoid getting shut down by banks or regulators. The AML crypto, Anti-Money Laundering rules that tie into KYC aren’t suggestions. They’re enforced by fines, criminal charges, and global blacklists.

People get caught in simple ways: using a fake ID, sharing an account with someone else, or trying to deposit funds from a banned wallet. One user in Nigeria got flagged because his bank account matched a known money mule. Another in India was banned after using a VPN to hide his location while trading on a platform that required local ID. North Korea’s Lazarus Group uses stolen identities to launder crypto—but regular users don’t need to be hackers to get in trouble. Even accidentally linking your exchange account to a blacklisted wallet can trigger a freeze. And once you’re flagged, it’s nearly impossible to get back in.

Some think KYC is just a hassle. But the real risk isn’t the paperwork—it’s losing access to your funds without warning. If you’re using an exchange that doesn’t do KYC, you’re not avoiding rules—you’re trusting a platform that could vanish tomorrow, leaving your crypto stuck or stolen. The posts below show how governments, exchanges, and users are caught in this system: from India’s strict tax tracking to China’s underground trading networks. You’ll see how people got caught, how they tried to hide, and what happens when the system finds them. This isn’t theory. It’s happening right now—and you need to know how to stay on the right side of it.