With the cryptocurrency fraud landscape shifting from a documents problem to an identity problem, it has become increasingly evident that the Know Your Customer packet that once anchored an exchange’s onboarding file is only as reliable as the identity behind it, and that foundation is eroding fast.
- Entrust found that digital forgeries made up 57% of all document fraud detected in 2024, up from 17% the year before.[1]
- Group-IB documented over 8,000 attempts at biometric injection – the digital insertion of fraudulent biometric data into a system’s data stream – against a single institution over eight months in 2025.[2]
- Sumsub reports that deepfakes now account for 11% of global fraud attempts, up from 7% two years ago, while AI-generated identity documents can be produced in bulk for around USD 15 each.[3]
- LexisNexis also sees synthetic identities behind 10% of fraud cases globally, an eightfold rise, with annual losses estimated at USD 20-40 billion.[4]
State actors have industrialized the technique. US prosecutors have charged North Korean operatives who used stolen or fabricated American, Malaysian, and other identities to secure remote developer roles at crypto firms and to open exchange accounts to launder the proceeds.[5] Chainalysis attributes to North Korea some 60% of the USD 3.4 billion in cryptocurrency stolen in 2025.[6] Industry evidence suggests that much of the identity documentation that underlies exchange disclosures – whether the exchange sits in the US, Hong Kong, or elsewhere – traces to synthetic, stolen, or otherwise fabricated identities.[7]
That matters because a subpoena response or a compelled disclosure tells counsel only who the exchange believes its customer to be. It does not identify the party that actually controls the funds. Treating that paperwork as the end of the inquiry, rather than the start of one, is how genuine counterparties go unidentified and assets go untraced.
This is where an independent investigative consultancy adds value that a compliance checklist cannot. Nardello & Co. pairs blockchain forensics and on-chain tracing with traditional open-source research and human intelligence, corroborating the contents of an exchange’s file against corporate records, litigation history, device and infrastructure data, and human sources, oftentimes in jurisdictions where legal process alone often stalls. The goal is not to accept a disclosure at face value, but to test it and to give clients and counsel a verified picture of the party with which they are actually dealing.
