KYC

KYC (know your customer) is the process in which a regulated financial service, such as a crypto exchange, identifies and verifies a customer's identity before letting them use some or all of its features. In the United States, FinCEN's Customer Due Diligence rule requires covered financial institutions, such as banks and securities brokers, to have procedures to identify and verify the identity of customers and of anyone who owns 25 percent or more of a company customer, and to keep monitoring accounts for suspicious activity. Rules differ by country, so check what applies where you live.

Airdrop hunters meet KYC mostly at exchanges. Binance's HMSTR Launchpool notice of 12 September 2024 listed KYC as required. Arbitrum took the opposite line: its Sybil document says requiring identity verification to qualify for ARB would undermine permissionless, pseudonymous use, so it was not considered. A genuine KYC check asks for proof of identity, never a seed phrase; ethereum.org notes that no legitimate service will ask for one.