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It seems that ShapeShift acted exactly as its name suggests, changing shape almost beyond recognition. Founder, CEO, and no SEC fan, Erik Voorhees's exchange once existed without accounts. Now they have a complete KYC and transmit customer data on demand.
ShapeShift shocked the crypto world with KYC
ShapeShift began implementing KYC in September 2018, which can only be described as a radical change in ethos. They initially called it "membership program", for which users should provide "basic personal information". to reward them in the form of higher trading limits, cheaper commissions, and so on.
Whichever method was used, the company pioneered a complete KYC / AML. And all customers should suffer by the end of the year. Voorhees later admitted that the decision was largely due to "regulatory hurdles". It also hurt the company financially, forcing it to lay off some 37 employees.
ShapeShift is made a name as a simple way to transfer cryptographic funds. But if the company were to compete in an increasingly demanding regulatory environment, it would have to comply. Clear and simple.
Change of form and application of the law
A blog post tweeted by Voorhees yesterday may shock its users who thought they had complete anonymity before the third quarter. Referring to Kraken and how their transparency vis-à-vis law enforcement also inspired ShapeShift, they claim that in 2018, the exchange allowed 60 requests from Law enforcement.
Kraken inspired us to convey similar transparency in law enforcement requests. Here is … "Pull back: How ShapeShift manages compliance with laws and regulations" https://t.co/aGVqeLvR4C @krakenfx @jespow #bitcoin #blockchain
– Erik Voorhees (@ErikVoorhees) January 18, 2019
The graphs below describe the different types of law enforcement requests from governments around the world.
The company says:
In the United States, they often take the form of subpoenas … Not surprisingly, the United States accounts for the largest number of such requests.
A subpoena is a court-ordered application that essentially requires a person or entity to take action. It could be either to testify in court or to hand over documents. Voorhees is no stranger to these.
What's interesting is that there was an influx of applications towards the end of the third quarter and a move towards the fourth quarter. The company says this is consistent with other cryptographic companies in the industry, citing Market Watch.
ShapeShift is no longer anonymous anyway
For users who thought that cryptographic transfer via ShapeShift was a viable way to facilitate criminal activity, KYC was cutting its wings. And if they had any idea that their transactions were anonymous on ShapeShift at any time last year, they were satisfied with a wake-up call.
Cryptocurrencies are subject to careful scrutiny as technology and usage evolve. ShapeShift has always considered financial transparency as a fundamental principle and for this reason we felt that the whole world should know that these types of law enforcement demands occur almost continuously.
What do you think of Shapeshift helping the forces of order? Share your thoughts below!
Images courtesy of Shutterstock, Shapeshift.io
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