How Does the Lack of Know Your Customer (KYC) Requirements on a DEX Facilitate Scams?

KYC requires financial institutions to verify the identity of their customers. Since most DEXs are permissionless and do not enforce KYC, scammers can operate with complete anonymity.

This makes it nearly impossible for law enforcement to trace and prosecute the individuals behind a rug pull or other malicious activities. The lack of identity verification provides a safe haven for illicit actors to move funds and launch scams.