The exchange maintains it has been falsely accused. Regardless, its reputation rests in the balance.
On Friday, September 28, the Wall Street Journal (WSJ) published an investigative report claiming that almost $90 million worth of suspect funds flowed through various cryptocurrency exchanges over the past two years. The journalists assert that, of this amount, about $9 million was processed by ShapeShift.
The exchange’s CEO, Erik Voorhees, was not happy with the article. He took to Medium on Sunday, September 30, to voice his concerns with the newspaper’s reportage. Namely, he believes that the journalists “omitted relevant information” in their story and made “factually incorrect and deceptive claims.”
Voorhees maintains that ShapeShift shared “actual facts” with the WSJ about the exchange’s activities, but the reporters did not include that information in their article. Moreover, he noted that even if the $9 million were laundered using the exchange, that would only represent 0.15 percent of ShapeShift’s exchange volume – an infinitesimal amount in his eyes.
He continued by listing the positive attributes he sees in ShapeShift, including its “strong record of complying with law-enforcement requests,” the organization’s “work with other exchanges on an almost-daily basis to identify and block thieves and criminals,” and the exchange’s policy of “blacklist[ing] suspicious addresses upon learning of them.”
Voorhees also called the WSJ‘s reporting “inaccurate” in that the journalists “didn’t understand how to properly read the blockchain transactions, so they assumed there was … ‘dirty money’ sent to ShapeShift.”
Although Voorhees provided other cogent arguments in his rebuke, none of that may matter in the long run. Considering the prominence of the WSJ and the widespread attention the article has received, the harm to ShapeShift’s reputation may have already been inflicted. Katherine Wu of blockchain company Messari Crypto noted:
This journalistic kerfuffle comes right after the exchange switched to a membership-only model for its customers. Under this new policy, users of the exchange must provide identifying information to continue using ShapeShift’s services. This shift, according to the exchange’s chief legal officer, Veronica McGregor, helps de-risk the organization “in the face of potential new regulations and abuse by criminals.”
Considering the timing of the WSJ article’s publication, it appears that the exchange’s path toward legitimacy, especially from a regulatory standpoint, has been set back a step. Wu might be right in her assessment of the situation; regulators could now have their watchful eyes on ShapeShift.
Daniel Putney is a full-time writer for ETHNews. He received his bachelor’s degree in English writing from the University of Nevada, Reno, where he also studied journalism and queer theory. In his free time, he writes poetry, plays the piano, and fangirls over fictional characters. He lives with his partner, three dogs, and two cats in the middle of nowhere, Nevada.
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