WSJ Investigation: ShapeShift Is Being Used by Criminals, Illogical Comparison

An investigative report has been published regarding the popular crypto exchangeShapeShift AG, a firm that is registered in Switzerland.

Money laundering is the problem at hand, and the report highlights a potentially worrying theme: that ShapeShift enables anonymous users to convert Bitcoin–which authorities can’t track–into other digital currencies that allow for much more anonymity.

Wall Street Journal Investigation

The investigation, conducted by The Wall Street Journal, specifically identified almost $9 million in suspected criminal proceeds that flowed through ShapeShift over the past two years.

Overall, most global exchanges operate beyond U.S. jurisdiction, but not ShapeShift. The firm is officially registered in loosely regulated Switzerland, but, as noted, its offices are in Colorado. ShapeShifts founder and chief executive, Erik Voorhees, along with its chief operating officer and its marketing chief, also live in the Denver area.

As stated by WSJ, a parade of suspected criminals have taken advantage of ShapeShifts services since the exchange opened in 2014. The papers’ claims are further reinforced by law-enforcement officials and independent researchers.

Consider last year’sWannaCry ransomware attacks, where hackers believed to be from North Koreaextorted millions of dollars, then used ShapeShift to convert Bitcoin into the “privacy coin” Monero, security researchers found.

Many cryptocurrency exchanges claim to follow federal rules intended to combat money laundering. To do so, they keep records of their customers identities and monitor transactions in attempts to root out suspicious activity. ShapeShift’sVoorhees, on the other hand, has long scoffed at such constraints:

“I dont think people should have their identity recorded to catch an occasional criminal,” he said in a May interview.

Scope of Money Laundering, Illogical Comparison

To examine the scope of cryptocurrency-related money laundering, The Journal built computer programs that tracked funds from more than 2,500 suspected investment frauds, hacks, blackmail schemes, and other alleged crimes that are focused around digital currencies. The Journals analysis which encompassed only a narrow slice of suspected criminal behavior involving cryptocurrencies identified $88.6 million laundered through 46 exchanges.

Many alleged perpetrators are unknown or on the run. Some have been arrested, and a small portion of the money less than $2 million that The Journal identified has apparently been seized by law enforcement, though court filings dont list specific amounts.

Of note is that The Journal found that ShapeShift did process nearly $9 million of the suspect funds, more than any other exchange with U.S. offices.

In response to the findings, The Journal provided ShapeShift with a list of the suspicious addresses it found to be using the exchange. The firms chief legal officer, Veronica McGregor, said ShapeShift reviewed those addresses and banned them from using the exchange.

As reported earlier this month by NewsBTC, McGregor also said ShapeShift plans to start requiring users to provide identification starting October 1. She said the company is doing this to “de-risk” itself in the face of potential new regulations and abuse by criminals, “not in response to any regulatory enforcement action.”

McGregor said she wants to separate Voorheess views from the companys:

“Just because its the personal philosophy of the CEO doesnt mean thats how the business is going to be run,” she said. “Hes not pro-money-laundering.”

However, as one of the main components of the report, WSJ compared the $2.7 billion per day banks have laundered over the past decade and $9 million allegedly laundered through ShapeShift. That is, a discrepancy of $1.97 trillion, meaning that banks have laundered $1.97 trillion more in the space of 24 months than the crypto exchange.

Image From Shutterstock

The post WSJ Investigation: ShapeShift Is Being Used by Criminals, Illogical Comparison appeared first on NewsBTC.

28.09.2018 / 23:05 51
Cryptocurrency Exchanges Have Been Used to Launder $88 Million Since 2016: WSJ Cryptocurrency Exchanges Have Been Used
Over 46 cryptocurrency exchanges around the globe assisted criminals in laundering more than $88 million over the past two years, a Wall Street
WSJ: Investigation Finds $88 Million in Laundered Money Using Cryptocurrency WSJ: Investigation Finds $88 Million in
3 min read”">[/i] [/b][/i] 0[/b] [/i] Share[/b] [/i][/i][/i][/i][/i] Cryptocurrency, Exchanges–A recent investigation published by The Wall Street
ShapeShift Ends Anonymity With Announcement of Mandatory KYC Data Collection ShapeShift Ends Anonymity With
Instant cryptocurrency exchange ShapeShift.io has become the latest cryptocurrency entity to succumb to user data collection as part of a major
Shapeshift Moves to Membership Model Requiring User Information Shapeshift Moves to Membership Model
Non-custodial crypto trading platform Shapeshift has introduced a membership program which will soon be mandatory. CEO Erik Voorhees explains that
ShapeShift Acquires Tool that Insta-Swaps Bitcoin into Dozens of other Cryptos ShapeShift Acquires Tool that
Swiss-based trading platform ShapeShift AG has announced the acquisition of Bitfract, a software firm that allows users to swap bitcoin into dozens
Exclusive: US Crypto Regulation Has Gotten Worse, Says ShapeShift Co-Founder Exclusive: US Crypto Regulation Has
At MoneyConf 2018 in Dublin I sat down with Jon, COO and Co-Founder of instant digital asset exchange ShapeShift. ShapeShift launched back in 2014
Comments (0)
Add a comment
Comment on