It is quite rare for an average ChangeHero user to know first-hand how our KYC/AML policies actually work. One of the reasons is the finely tuned systems that only pick what is necessary and another is that a lot of it stays behind the scenes. So, for transparency’s sake, in the series of articles regarding our AML cases, we are going to shed light on some high-impact cases and explain how our AML/KYC policies work to users’ benefit.
Key Takeaways
- As a non-custodial service, ChangeHero employs an automatic system that analyzes transactions on a case-by-case basis. This way, it can stay compliant with AML/CFT regulations without forcing everyone to go through the KYC procedure.
- The AML/CFT compliance is not a whim: it benefits users by ensuring that they are using a legitimate and secure platform and receive assets that were not involved in any criminal activity, which can create issues for them later down the line.
- ChangeHero also cooperates with authorities to assist in official investigations. The team has a track record of successful cases that resolved in reimbursing victims of cybercrime.
How It Works and Why It Matters
If you used ChangeHero before, you have been asked to familiarise yourself with our KYC policy, so it should be at least somewhat familiar. But for those of you who have not or who would rather read a high-level overview than work your way through legalese, let us give an overview of what you can expect.
By default, no user is asked to go through an identity verification, which is usually the case on centralized exchanges that track user accounts. But ChangeHero operates without user accounts! How do we comply with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations then?
The security checks are applied to transactions on a case-by-case basis rather than to users themselves. If one does happen, the transaction is paused and the user is prompted to contact support for further instructions. They usually include a list of documents that are widely considered sufficient for user identification: a selfie with an ID, rarely source-of-funds (e.g. receipts). When the KYC (“know your customer”) procedure is complete or stopped, the personal data is purged from the servers; in case a customer declines, their transaction is refunded.
All checks are performed automatically with a sophisticated flag system that detects suspicious or otherwise requiring attention transactions. It is grounded in on-chain analysis rather than often opaque criteria of verification on CEXs. This way, even during high traffic, no transaction that needs attention flies under the radar.
Note the phrasing: not all transactions that get paused are necessarily involved in anything illegal, they just need to be looked at. Sometimes it is tainted coins that a holder might not even be aware of or a transaction that only matches a pattern. This is why further identification is necessary and if everything is fine, the exchange continues as normal.
Why Know Your Customer?
The KYC procedures and compliance are not to stall transactions or annoy users. As a project that aims to make the crypto space a better place, ChangeHero is committed to protecting our customers and improving the industry.
How does it help users? By keeping fund streams clean and free of so-called “tainted” coins, we reduce the chances that what you exchanged with us once would later be rejected by other regulated crypto service providers. You can use ChangeHero without worrying that you’d get crypto tokens that won’t be accepted anywhere else.
Our actions are not limited to curbing flows of illicitly acquired crypto funds and preventing their laundering. In cases when the service can tangibly help recover stolen or hacked assets, we do what we can to help. During 2025 to date, ChangeHero has lent assistance to government agencies in cases that saw more than $1M of stolen funds returned to rightful owners.
How does it help the industry? Zooming out into the bigger picture, reducing the amount of crime taking place using crypto is in the best interest of most honest industry participants. It would be a little pretentious to claim that ChangeHero alone significantly contributes to this but by doing our part as a part of bigger, collective initiatives, we believe we can achieve a better space for all.
Behind the Curtain: Unraveling a Case
Coming back to returning stolen funds, how does that even work? Aren’t blockchain transactions supposed to be unstoppable and irreversible? While it is true, with some off-the-chain work, more and more victims of cybercrime see their lost funds safely returned.
One of recent illustrative cases in which ChangeHero helped the Italian cybercrime unit unfolded as follows. ChangeHero’s compliance team received a legal request with details of a major cyberattack and attacker(s) addresses. Using this information, we were able to stop some of the funds from being laundered using the platform by halting a transaction from one of the specified addresses and performing security checks. With further assistance and information from the unit, the funds were returned to the user that originally fell victim to the attack.
An important takeaway from this case is that the ChangeHero team does not single-handedly decide what is and isn’t crime and what further steps to take. If there is an active investigation, proven by the legal request, we do what we can to cooperate and ensure the best outcome for everyone involved. At the same time, such serious steps will be taken only if there is valid proof of suspicious activity: formal requests from authorized entities, intel verified by reputable members of the community, etc.
Conclusion
Our team has long maintained that our strong commitment to compliance and security stems from prioritizing the user experience. Momentarily, receiving a KYC notice and going through with it might seem like a nuisance and a detriment to it but there is a bigger picture. Keeping funds you receive free of unwanted baggage and not taking bad actors’ side all contributes to a better service and a better industry.
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