Why LCX Requires Proof of Funds: Ensuring Security and Compliance
by LCX Team · · Updated August 8, 2024
Why do I need to disclose the origin of my funds as an LCX user?
As Europe’s one of the largest and most regulated cryptocurrency trading platforms, LCX is required by law to ask users to provide proof of funds. This means that users need to disclose the source of the resources—both fiat money and cryptocurrencies—they wish to use for transactions on LCX.
Why does LCX ask about the origin of my funds?
We understand that it might feel uncomfortable or inconvenient when LCX requests information about the source of your funds—the money you plan to invest or trade on our platform. Money is a deeply personal and sensitive topic, and we recognize that asking for this information might seem intrusive.
However, it is essential to take every measure to ensure that LCX is not used for illegal activities such as money laundering, terrorist financing, scams, or other unlawful practices. We are committed to protecting your sensitive data and comply fully with applicable data protection laws. Data protection is a top priority for us, and LCX will never share your information unless required by law (e.g., cooperating with authorities based on an official order). Your privacy and security are paramount to us.
Do other providers require proof of funds?
Yes, every reputable cryptocurrency service provider, including LCX, will require you to supply proof of funds for the fiat currencies or cryptocurrencies you intend to trade. When a provider asks you to complete KYC (Know Your Customer) procedures to verify your account and provide proof of the source of your funds, it indicates compliance with current legislative requirements and regulations.
The requirement to verify the source of funds and collect related documentation has been a standard legal obligation in the financial industry (e.g., banks, and insurance companies) for many years. Since January 10th, 2020, this legal framework has been extended to cryptocurrency service providers in the EU.
To help you understand this process better, we’ve detailed everything you need to know about “Proof of Funds” and answered any questions you might have.
Can I avoid providing proof of funds by using another provider?
The simple answer is no.
As the crypto industry has evolved globally, similar regulations have been adopted worldwide. The requirement to provide proof of funds depends on each user’s individual situation. To comply with legal requirements, users planning to deposit and trade larger amounts must be prepared to provide proof of funds upon request.
Please note that depositing smaller amounts or executing multiple transactions does not exempt users from the proof of funds requirement.
For more information, you can read our privacy policy using the keyword “proof of funds.” This policy is accepted during the sign-up process and applies to all transactions, remaining valid even after amendments.
Why Does LCX Need to Know About My Funds?
LCX is required by law to ask you for proof of your funds for several important reasons:
- Legal Compliance: We operate in full compliance with all financial laws and regulations, which mandate that we collect this information from our users.
- Security and Safety: To maintain a safe and secure environment for our users, we need to prevent fraudulent and illegal activities.
- Identity Verification: We verify your account and the source of your funds to ensure your identity has not been compromised and that it is genuinely you who is registering to invest and trade.
What about proof of funds for cryptocurrencies?
If you need to provide documentation for cryptocurrency withdrawals from other platforms (such as exchanges, trading platforms, or online gambling sites), you must include account details with your full name or email address and the name of the platform (origin of the funds).
Additionally, include any other relevant information such as transaction IDs that allows us to attribute your trades to you.
What happens if I can’t provide proof of funds?
Please note that LCX is legally required to review the source of your funds, as outlined in our terms and conditions. If you cannot provide the necessary documentation, we will conduct a final review, after which you will have the option to withdraw your remaining funds. Your account will then be deactivated. If this situation arises, please contact us via our contact form, selecting the appropriate category.
