4.1. Two-factor authentication (2FA) and identity verification (KYC): the first line of defense
Two-factor authentication (2FA) and identity verification (KYC) are fundamental pillars to ensure user security in the world of digital currencies. Two-factor authentication is a security mechanism that requires users to provide two different forms of verification for their identity, such as a password and a code sent to their smartphone or generated by a dedicated app. This additional layer of security significantly enhances protection against unauthorized access, thereby reducing the risks of account theft.
As for Know Your Customer (KYC), it is a legal process carried out by financial institutions and platforms to verify the identities of new and existing customers. The main goal of this process is to prevent illegal activities such as money laundering, terrorism financing, and fraud. While two-factor authentication focuses on protecting accounts from hacking, identity verification links the digital persona to the real identity, thereby reducing the likelihood of the account being used for criminal activities. It can be said that two-factor authentication is the first line of defense against hacking attempts, while identity verification is the defense line against financial fraud, and both are essential for providing a safe and reliable trading environment.
4.2. Combating Financial Crimes: A Comprehensive Strategy for Platforms
Major financial platforms recognize that combating financial crimes is not just a legal obligation but an essential part of their strategy to enhance trust in the cryptocurrency ecosystem. Platforms like Binance take a comprehensive approach to crime fighting by implementing multi-level risk control systems, closely collaborating with law enforcement agencies, and educating users.
The mechanisms used include sending customized notifications to users when potentially fraudulent behavior is detected, using models to assess risk, and relying on databases of malicious addresses to prevent transfers to suspected wallets. Additionally, the legal and compliance team at the platform works alongside law enforcement agencies to trace illicit funds, recover stolen assets, and assist in identifying individuals with malicious intentions. These actions demonstrate that the evolution of the cryptocurrency market pushes centralized platforms to adopt comprehensive security strategies that go beyond technology to include collaboration with regulatory bodies, thereby enhancing the legitimacy of the industry as a whole. This balance between the ideal of decentralization and the practical responsibility forms the cornerstone of building a more mature and sustainable digital financial market.