AML/KYC provider for the Delegation Program

Mina Foundation has recently released a Delegation Program Improvement Plan that will be rolled out over the next months. The blog post with the details the can be found here:

One of the improvements to the program will be conducting AML/KYC procedure on Applicants. As stated in the blog post:

The purpose of this is to reduce the possibility of bad actors trying to set up multiple accounts to participate and to improve the trust in the system. The Mina Foundation has identified an AML/KYC partner and will be requiring each block producer participating in the Delegation Program to pass its AML/KYC check before receiving staking rewards from the Mina Protocol before the next delegation cycle begins.

Can we know the name of the company that will provide AML/KYC checks?

May 17, 2022, edited for clarity:
I have added my message from Mina Discord: Mina Protocol

As we all know, Coinlist was the company that was conducting KYC procedures for the GFM token program, Prism token program and Mina grants.

Unfortunately Coinlist is on track to become one of the worst performing companies in the crypto industry with the record number of negative reviews and complaints including missing funds, lack of transparency and no customer support.

The reason for my post is the concern that Coinlist will be chosen again as an AML/KYC provider for the Delegation Program.

What will be the outcome of choosing Coinlist as a KYC provider?

A lot of the Mina validators, both well known in the community and the new ones, will not be able to participate in the Delegation Program, because Coinlist has blocked their accounts without prior notice and with no explanation. No replies to support tickets have been provided.

This raises serious concerns about the integrity, transparency and trust towards this platform. I have created a thread at AML/KYC provider for the Delegation Program to discuss this issue. ’

Even if you are not a validator, please take a minute to register at Mina Research forum and share you opinion on this. Please support your validators by SAYING NO to Coinlist as a KYC provider for the Delegation Program.

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I saw your concern about the KYC provider on discord. I mostly agree with your points.

But using KYC is still better than to keep giving MF delegations in the dark, because the system is too easy to abuse.

Also, KYC alone is easy to abuse too. And it is probably not the best way to achieve validator selection.

In my opinion, it is an old fashon procedure mostly brought in the crypto space by regulators. It is a poor tool that we should avoid as much as possible.
In addition, uptime is not enough too, I don’t see how a validator with 99.99% serves better the ecosystem than one with 99.97%.

I think delegations should reward commitment to the project. It can be measured in multiple ways:

  • participation in discord and here
  • skin in the game (minimal stake)
  • history in the Mina community
  • uptime (minimum threshold like 99%)
  • documentation / communication (twitter, youtube, web, etc)

I hope KYC is just one step in the right direction and that we will design delegation rules that serve better MINA.

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I share the coinlist concerns.

And yes, coinlist/tokensoft KYCs can be abused

There was a video call for more than 600+ GFMs, I hope the similar process is applicable to the delegation (especially since there will be 240 places only)

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This is how Coinlist grows their customer base:

Translation: this person says the business is going very well, he has just registered 340 accounts for the new token sale (all KYCed)

Kazakhstan, 20 different accounts from one IP address, but different devices (antidetect browser), there were no bans.

I think just sticking to coinlist is lazy and on top and has been a little shady with jump in numbers. There are multiple KYC services available and a few more options should be provided , I honestly don’t even understand why is this not being considered.

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While the whole world is standing with Ukraine, Coinlist is stealing money from its Ukrainian customers:

No platform is 100% abuse proof and Coinlist is notorious for its banning policy. I am not sure if Mina is legally required to use Coinlist only for KYC/AML. If not then I don’t see why it is so difficult to introduce another KYC provider.

I feel there’s a communication gap between Mina and its validator community. It’s not the first time that the last minute changes are introduced which is disappointing. Most of the delegation related questions are left unanswered. We need to learn from past mistakes, not to repeat them.

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here we go: [WTS] 1200 coinlist accounts - The Bitcoin Forum

I am adding my reply to Evan here for better visibility:

Hello Evan. Thank you for your reply. I highly doubt that putting one of the validators (Coinlist) in a position, where they are allowed to eliminate their direct competitors with just one click of a mouse and manipulate the list of validators - to decide, who can and who can not receive a delegation, as well as to decide who can and who can not receive Community grants (I am talking of @whisperit#8145 case now) is going to benefit the network in any way. Still, this is invaluable intel for those who are thinking long-term, so that they can reallocate their time and resources. Thank you so much for sharing your vision :pray:

Let me share a couple of thoughts on this: Since we stick to openness, transparency and respect towards each other, I asked to link us the exact law or regulation in the British Virgin Islands, where MF is incorporated, which requires crypto companies to conduct KYC - and never got any response. Why? I guess because no such law or regulation ever existed - cryptocurrency is not regulated in the BVI.

Needless to say, that new changes were introduced out of the blue in the middle of the cycle, without discussion or consultation neither with the community, nor with the Node Working Group members, even without prior notice (which is a standard courtecy rule). A simple 30 days prior notice would allow “blacklisted” members to shut down their nodes and not to waste significant amounts on high end servers.

Needless to say also, that I personally asked several times, including Node Working group sessions - what will be the requirements for the new delegation cycle, since the start of the new cycle approached very fast and we still were in the dark regarding what would happen after the number of nodes with 100% uptime exceed 120. KYC was not mentioned any single time as a requirement to receive a delegation. Instead, I got a response that “we will arrange discussions within the community about that very soon, so there will be more clarity closer to the new cycle”. No such discussions ever happened.

The problem of bad actors and fake accounts could be easily avoided by:

  • implementing a self-stake (a collateral) that any validator should keep on their account all the time they hold a delegation,
  • by implementing a “proof-of-experience” rule - running the node for at least 6 months and (or) having at least 1 delegator, and (or) having produced at least 1 block in the past, and (or) having a cold wallet setup as a mandatory requirement to receive a delegation - for security reasons,
  • just a quick interview revealing that a person at least knows his way around the node, not to mention opening 3085 port to the outside, etc etc (edited)

All of these was rejected and no one even bothered to explain why, even to the members of Node Working Group. So this is a 100% hand-made problem - it was created not because of regulations or anything like that, but just because of poor communication between the team and validators and the lack of understanding or perhaps, experience, on how to build a dialogue with the community and discuss things

On another note, StakewithJenny is pretty much banned on Coinlist, non the less she received a delegation this cycle. So, as you see, certain things happen, although you say they weren’t possible. She received a delegation, being banned on Coinlist. The rest you know. I do hope it’s just a long vacation that made her disappear.

I have a couple of thoughts in mind about why ZK-enabled KYC / identity won’t solve this problem, and only will make it worse, will share those a bit later if you are interested in hearing feedback

Source: Discord