Crypto users fight back against dYdX campaign that requires face scans

by · September 1, 2022

Many social media users have lambasted decentralized exchange dYdX over the identification verification process to receive a $25 signup and deposit bonus.

In a Wednesday blog post, dYdX announced that new users who deposited 500 USD Coin (USDC) for their first transactions could receive a bonus promotion of 25 USDC, provided they were willing to do a “liveness check”. According to the exchange, the verification process accessed a user’s webcam and “compares whether your image has been used with another account on dYdX.”

Although the distribution was entirely voluntary, many on Twitter suggested that the checks amounted to invasions of privacy. DeFi Watch founder Chris Blec accused the exchange of “bribing users to allow their faces to be scanned and disguising it as a ‘promotion'”, hypothesizing that dYdX and other platforms could offer greater incentives in return for clients to give up more information .

“What dYdX is doing now is just wrong,” so Pale. “They mislead users as to the purpose. They know that every facial scan they collect is from an innocent. A criminal does not want to face scan, but can still use dYdX. They bribe new users to give up their privacy just to satisfy regulators.”

According to dYdX – which reported “reviewing many solutions” – the face scans were a solution that provided “the best user experience for our users to indicate that they are indeed one person without revealing their full identity.” In a statement to Cointelegraph, a spokesperson for dYdX said that the campaign does not require users to “provide personal information” and that the photo verification was intended “only to prevent fraud.” Marc Boiron, general counsel at Polygon and former head of the legal office at dYdX, as well claimed on Twitter that the liveness checks were “incomplete and ineffective without combining it with other requirements.”

However, Blec became claimed that the stock exchange may have acted on behalf of regulators:

“It’s ridiculous to assume that a crypto exchange paying people to scan their faces is for any reason *other than* some form of regulatory compliance, or at least testing a mechanism that they plan to expand in the future.”

“Whatever the reason, this is an absolutely terrible idea and you should back off immediately,” so Adam Cochran, a general partner at Cinneamhain Ventures. “There is absolutely no acceptable reason to collect user biometrics. It is better to drop the incentive program altogether.”

Related: dYdX confirms blocking (and unblocking) of some accounts flagged in Tornado Cash controversy

From his Twitter account, a spokesperson for dYdX so the verification had “ZERO to do with regulations” and was “only a product to discover if you are a unique person.” However, the platform apparently did not address concerns about which service would provide the facial scans and how the data would be stored.