CryptoID IDO Announcement

Token-backed KYC & AML

Published in

Future Venture

6 min readOct 29, 2021

The Cypherpunk movement kicked off everything Web3. Without the initial idealogues, hackers and visionaries who created bitcoin, zcash, and other decentralized protocols, we would not be where we are toady.

At the heart of the Cypherpunk ideology is a rejection of the role of nation-states, a rejection of ‘identity’. Instead, we all cooperate seamlessly via the metaverse using fair, democratic mechanisms that give power back to the people.

I used to subscribe to this ideology, and a certain part of me still does. I think that in 50 years it’s not unreasonable to expect DAOs to usurp nation-states and large corporations. It’s also not unreasonable to expect the majority of transactions to take place via anonymous avatars, mathematically securing against fraud using decentralised consensus mechanisms.

However, we are a long way off this fanciful vision. And in the interim, the rejection of nation-states, regulation, and holding people accountable to a real identity, will end up limiting web3s growth.

Regulation, then, is actually healthy, it’s a required step to get to wherever the fuck this crazy web3 journey will take us. It’s a required step to mass adoption — and it will get us there fast.

CryptoID

CryptoID is the first token-backed KYC (know your customer) & AML (anti-money laundering) solution for the crypto market. KYC will allow clients such as funds, launchpads and vice sites (gambling, porn etc.) to verify an identity against ma crypto wallet. It is the first product of its kind that links a wallet, such as Metamask to an identity, rather than the traditional method of KYC which relies on a bank account. CryptoID is truly a Web3 Product.

The Problem

At its core, the problem is that crypto projects don’t currently know who they are dealing with. This brings a range of issues, whether that be related to serious crimes, poor investing culture, or simply companies not being able to monitor the age of their customers.

This anonymity has drawn significant attention and is no doubt responsible for substantial inflows of capital. However, as the industry matures and integration with traditional business sectors grow, so do the applications which require these businesses to have a clear understanding of who they are dealing with.

Crypto-backed funds must be confident that the investments that they receive are not associated with money laundering or terrorism funding. Equally, adult entertainment websites need to ensure that their product creators or consumers are of adequate age. For both of these examples, it is the business’s moral obligation to understand who they are dealing with. Failure to do so may not prevent short-term success but would no doubt limit their longevity.

Lithium itself faces these problems outlined w was one of the key reasons we invested in this project, as we’ll discuss later.

Solution

CryptoID will be a sleek and frictionless KYC and Anti AML solution to help legitimise crypto projects and enable growth into wider markets. It will be the first to link a customer’s identity direct to their wallet and will cover 6500+ document types and perform checks 24/7 across more than 200+ countries globally. The security of our customer data is a top priority. Sensitive information will not be shared with our clients.

Customers link their wallets from sites such as MetaMask to the CryptoID add-on and the system checks whether they have been previously verified. Non-verified wallets undergo the KYC check funded by the $CID token before the customer receives their CryptoID passport.

Business Model

CryptoID will charge for checks. This cost will either be fronted by the client (for example a launchpad) or the customer. One innovation the CryptoID product brings is that it allows clients to decide who should bear the cost of a check, based on the number of client tokens a customer holds. For example, Lithium could allow free KYC for all holders who are in the starter tier or above, but if you are involved in a public sale, and don’t hold Lithium tokens, you’d have to pay.

Market

Institutional investments in crypto have grown significantly over the last 18 months. PwC estimated that assets under management for crypto hedge funds alone increased from to $3.8bn in 2020 from $2bn the year prior. This growth is projected to continue as hedged funds project that they will hold on average 7.2% of their assets in crypto in the next five years’ time. If this was to be replicated across the whole sector then it would equate to around $312bn, based on the estimated size of the industry. This presents a huge and growing opportunity for crypto projects. Those that satisfy requirements such as KYC and AML checks will be the first to capitalise on this.

Investors

CryptoID took a pre-seed investment from Lithium Ventures. They will also be raising a small seed round from other crypto VC firms before the IDO.

Team

The CryptoID team is made up of a group of experienced individuals, who, combined have the skillset to execute their vision.

Mr KYC is the Founder/CEO. An experienced consultant working with a range of large and medium cap companies, he launched CryptoID due to the KYC needs of this client base. Vast understanding of the industry as a whole and first-hand experience of the issues companies face means he’s well placed to drive forward the CryptoID project

Mr Legal is the head of legal (surprisingly!) for CryptoID. He’s worked in established law firms over the last 10 years and has a wealth of experience, primarily focused on corporate law. He will be ensuring that CryptoID evolves in line with nation-state regulatory practices and is always ahead of evolving frameworks.

Mr Tech takes the role of CTO. Having worked on KYC/AML projects in the TradFi industry before, he knows how to build a frictionless product customers will love.

Due to the current grey regulation requirements of KYC in crypto, the team will not be doxxing until more clarity from regulatory boards such as the FCA is given.

Token Utility

The $CID token will be fixed, meaning that there will be a maximum supply in circulation. In contrast to the value of inflationary currencies, the value of each token will increase over time as the supply is reduced.

$CID will adopt a frictionless yield model which takes a 4% transaction fee on each trade, distributes 2% proportionally to holders based on the size of their holdings and passes 2% to the development wallet. This proven model ensures that tokens are distributed to all holders regularly through fees.

$CID will let holders stake, opening them up to the upside of the reward pool and tokens from transactions, with 50% of $CID generated from transactions being sent to the rewards pool. 20% of all tokens will also be reserved for rewards, to encourage long-term holding.

Lithium Involvement

Lithium has taken an incredibly active role in shaping this product. Really, this is a product that we need for our launchpad, and we know it solves a problem for many other companies in the space.

Lithium will be one of the first customers to be using CryptoID as we start to launch more established projects, that require investor KYC.