Legacy users of cryptocurrency exchange Poloniex reported that their accounts had remained frozen despite completing a newly mandated know your customer (KYC) verification process imposed by the exchange.
Poloniex, which was acquired by Goldman Sachs-backed company Circle for $400 million in February, announced the changes to their identity verification process in a press release on May 27. In the post, the exchange asked “all legacy Poloniex customers who have not provided full identification information in the past to do so now through the Poloniex profile page.”
The post claimed that Poloniex “will take steps to verify [the information] and re-enable trading and transactions” for affected accounts “as soon as [users] submit this information.” However, many thousands of legacy accounts remained frozen after users completed the mandatory KYC checks.
The newly mandated verification process was not optional and users had 14 days to comply or face additional measures. Problems with frozen accounts began right after the new requirements were announced on May 27.
A subreddit channel dedicated to discussing Poloniex was packed with posts from users complaining that their legacy accounts had remained frozen, with some posters claiming that the number of affected users was over 50,000.
Poloniex had warned legacy account holders that they would be required to verify their identity eventually in a December 27, 2017 press release. The release urged legacy users to complete verification but did not mandate verification as a requirement to continue using the platform at that time.
American cryptocurrency companies, especially exchanges, have been exposed to increasing oversight from regulators such as the US Securities and Exchange Commission (SEC). The US Department of Justice (DOJ) has opened an investigation into price manipulation of Ethereum and Bitcoin, whilst a major investigation called “Cryptosweep” was opened by the North American Securities Administrators Association (NASAA) on May 21.
Poloniex noted in their May 27 press release that they are “committed to compliance with all applicable law requiring identification and verification” of customers. “Please rest assured that your funds remain safe and accounted for while you complete this process,” the release added.