Clarifications on Gate.io’s KYC Measures

As a pioneering platfoform in digital asset trading, Gate.io has always prioritized the safety, stability, and reliability of its customers' experiences. The platfoform has established acomprehensive risk-based Anti-Money Laundering/Counter-Terrorism Financing/Sanctions(AML/CTF/Sanctions) program in line with international standards and practices, reflecting itscommitment to fofostering a secure environment fofor digital asset trading.

Gate.io's AML/CTF/Sanctions program represents a strong commitment to preventing moneylaundering, terrorist financing, and other illegal activities on the platfoform. This is achieved byimplementing robust internal controls, including a set of AML/CTF/Sanctions regimes, standards, procedures, and other policy documents, all designed to create a risk-aversetrading environment. In addition, Gate Group has already obtained licenses or registrations inmany jurisdictions to provide digital asset-related services, including MSB/MTL in the UnitedStates of America, FINTRAC MSB in Canada, Proprietary Trading in Crypto-Commodities inDMCC, TCSP in Hong Kong, Virtual Currency Exchange Operator and Wallet ServiceOperator in Lithuania, Class 4 VFA Licence: Virtual Asset Exchange and Custodian Service inMalta, and Charity License in Gibraltar and more. It also proves to some extent that we havecomprehensive risk-based Anti-Money Laundering/Counter-Terrorism Financing/Sanctions(AML/CTF/Sanctions) programs in line with international standards and practices.

Embracing KYC, CDD, and EDD Procedures

A key part of Gate.io’s anti-money laundering strategy revolves around Know Your Customer(KYC), Customer Due Diligence (CDD), and Enhanced Due Diligence (EDD) procedures. Gate.io has meticulously written KYC/CDD policies and procedures, and all customers mustundergo KYC procedures befofore they begin trading. This methodical approach to KYC involves difffferent levels according to a risk-based approach. Customers are given difffferent permissions through these levels based on a comprehensiveevaluation of their risk profiles. And to enhance the KYC verification, Gate.io also cooperateswith world-renowned identity authentication risk solution providers.

Ongoing Reviews and Global Sanctions Control

The platfoform also conducts ongoing reviews and monitoring of the customers’ transactionsand profiles based on their risk ratings, with EDD implemented fofor higher-risk clients, and taketimely and necessary controls to mitigate risks. Gate.io maintains a stringent global sanctionsreview procedure with real-time updated global sanctions database, a comprehensivetransaction monitoring system integrated with well-known blockchain KYT solution providersfofor abnormal activities, and meticulous record-keeping practices. Together, these controlsensure that Gate.io does not engage with any sanctioned customer or customer beyond itsrisk tolerance.

Risk Management and Restricted Locations

Gate.io boasts a comprehensive risk management system. It has built a detailed risk control factor database and risk monitoring system, conducting real-time risk control inspections onits business operations. By closely monitoring various risk control indicators fofor early warningsand overruns, Gate.io ensures the asset security of the platfoform and its users, as well as asafe and healthy trading environment.

The platfoform also maintains a list of countries/regions where it does not provide services andimplements stringent controls to intercept and manage potential risks in a timely manner.

Independent and Professional Risk Control & AML Team

Gate.io’s independent and professional risk control team is at the helm of these risk controlmeasures and reports directly to the CEO. The team members hold relevant qualificationssuch as CAMS, CGSS, Certified Internal Auditor (CIA), etc., bringing many years ofcompliance and risk control experience in both traditional financial and crypto industries to theplatfoform.

These measures are complemented by initial and continuing training fofor all related personnel, not only the Risk Control and AML team, but also all employees of Gate.io, ensuring everyteam member is equipped with up-to-date proper knowledge and skills to identify fy and mitigatepotential risks in their positions.

Towards a Secure Cryryptocurrency Future

Since its inception, Gate.io has taken a user-first approach, providing a secure andtrustworthy digital asset trading environment. Through its comprehensive risk controlmeasures and adherence to stringent AML/CTF/Sanctions standards, Gate.io is solidifyfying itsposition as one of the safest cryptocurrency exchanges in the world. This reflects Gate.io’scontinuous commitment to staying ahead of the curve in compliance with applicable laws andregulations, protecting its users and the integrity of the digital asset industry.

Clarification on ZachXBT's Tweet

The situation described in ZachXBT's tweet is incomplete and partial, and we'd like to clarifyfy:

1. Gate.io has implemented robust KYC controls and watchlist screening mechanismsthrough a leading provider of risk solutions in the industry. This strategic partnershipenables us to conduct comprehensive initial screenings and ensure ongoing monitoringthroughout the customer relationship. We would like to reiterate that our global watchlistscreening encompasses authorities such as the Offffice of Foreign Assets Control (OFAC),the European Union (EU), the United Nations (UN), the Federal Bureau of Investigation(FBI), the Bureau of Industry and Security (BIS) and others. Furthermore, we continuouslymonitor media sources fofor any updates regarding sanctions and regularly test our name- screening vendors fofor any newly added blacklist to ensure the thoroughness and accuracyof our watchlists.

2. As a matter of fact, ZachXBT deliberately registered multiple fictitious accounts byinputting infoformation of individuals who had recently been sanctioned by the OFAC or falsenames to test our KYC process. This approach was specifically designed to circumvent ourrobust KYC name screening controls.Our name screening system has promptly detected a few unusual accounts (e.g. a truematch against a recent OFAC target) registered by ZachXBT. Consequently, our systemautomatically triggered the requirement fofor ZachXBT to complete KYC2. As a result, his account underwrwent temporary restrictions, with limited functionality solely allowing thesubmission of KYC2 infoformation. It is important to note that ZachXBT did not disclose thisspecific scenario on his Twitter.Aftfter several rounds of testing by all means, it was revealed that ZachXBT intentionallyentered Kim Jong-UN in the name field, while selecting the UK as both nationality andresidence to bypass our vendor's back-end screening logic. As a consequence, ourvendor's system flagged it as a false positive because the testing account 'Kim Jong-UN' associated with ZachXBT belongs to an individual with UK nationality and residenceinstead of North Korea.

3. Following the inadvertent passage of the fake testing account through the KYC1 level(while bearing in mind that certain products, transactions and withdrawal amounts remainrestricted at this stage) our system subsequently detected anomalies and potentialmatches against the watchlist. Hence, in line with our risk-based approach, we swiftftly tooka series of further actions to address any concerns and mitigate potential risks. Theseactions included 1) communicating with our screening vendor fofor logic improvement 2)implementing immediate restrictions on the fictitious account, 3) expediting enhanced duediligence procedures to promptly request additional infoformation, and 4) fine-tuning ourname screening logic to adopt a more stringent approach.

4. In order to gain a better understanding of the KYC controls adopted by our industry peers, we have conducted rigorous and impartial testing of KYC controls implemented by otherglobal leading crypto exchanges. During the assessment, we utilized the same keywordsas ZachXBT’s including "Kim Jong-UN" to register testing accounts on fofour widely-usedcrypto exchanges. Note that the intention behind this testing was solely to evaluate theeffffectiveness and stringency of their KYC procedures in a standardized manner, withoutany bias or negative implications. Our findings revealed that, in the case of three out of fofourexchanges, the keyword of "Kim Jong-UN" was able to bypass the KYC1 requirement. Even in the instance of the remaining exchange enfoforcing mandatory KYC, our testingdemonstrated that accounts could still be registered using the same keyword. Furthermore, we observed that certain exchanges provided deposit and withdrawal functionalities tocustomers even at the KYC0 level, which raised concerns regarding their adherence torigorous security protocols. It is important to highlight that Gate.io, we prioritize the securityand integrity of our services. Therefofore, we have implemented mandatory KYC1requirements fofor our customers, ensuring that they complete the necessary verificationprocess to access our platfoform. This approach allows us to maintain a higher level ofsecurity while providing our users with a more controlled and secure environment.

5. Our dedicated team and robust internal systems have achieved a level of excellencethrough significant advancements and refinements. We are continuously committed toenhancing our AML/KYC controls to combat money laundering and terrorist financingeffffectively. Our tireless effffoforts are driven by our unwavering dedication to making Gate.io asafe and more secure platfoform fofor staying proactive and vigilant in evolving our securitymeasures to provide you with the utmost protection and peace in mind.