Citing an “extremely overwhelming demand”, the decentralized trading platform dYdX has stopped promoting a deposit scheme that required its users to verify their identity via webcam.
Despite dYdX’s claim to success, even a strong backlash to the scheme on social media may have contributed to its sudden and immediate termination.
I don’t know your client
On August 31, dYdX introduced a bonus scheme for new users. In exchange for the USDC stablecoin’s $ 500 deposit, its users were told that they would be eligible to collect a one-time deposit bonus of $ 25 in USDC. The socket? To receive the bonus, users should also undergo a “vitality check”.
This vitality check involved sending biometric data via webcam to dYdX. The company would then send that information to a third party. An “external server controlled by our provider, compliant with the GDPR”. The General Data Protection Regulation (GDPR) is a privacy and security law approved by the European Union.
According to the exchange, this sensitive information would then be used to ensure that people did not attempt to spam the promotion with multiple claims.
The proposal, reminiscent of the Anti-Money Laundering / Know Your Customer (AML / KYC) requirements, immediately attracted the ire of Crypto Twitter users, many of whom began the work of mercilessly roasting what they perceived to be the intrusive nature of the program.
A great success story
With Twitter swimming in tasty comments on the scheme, dYdX decided to end the offer a few days after its launch.
“Due to the extremely overwhelming demand for the $ 25 deposit bonus promotion, we are ending the campaign, effective immediately,” said dYdX in a tweet.
“Thanks to the many thousands of new users who joined dYdX today. We really underestimated the amount of interest the campaign has garnered. “
The recent backlash against dYdX comes just weeks after another controversy engulfed the company. In mid-August, dYdX was among a host of cryptocurrency companies (including Aave and Uniswap) that implemented sanctions against Tornado Cash at the behest of the US Treasury Department.
Although government sanctions cannot be controlled by dYdX, many users, rightly or wrongly, did not appreciate how the DeFi protocol agreed to government requests. With that wound still fresh in mind, the introduction of a vitality check seems particularly inopportune. dYdX may have a long way to go before it can be rehabilitated in the eyes of these users.
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