ShapeShift CEO Erik Voorhees has published a new blog post refuting accusations from the Wall Street Journal surrounding a multi-million dollar money laundering network operating through the ShapeShift exchange. As previously reported by Unhashed, Switzerland-based digital currency exchange ShapeShift has been accused of being one the primary platforms used for $88.6 million in illicit funds being funneled through various cryptocurrency exchanges worldwide. Yesterday, October 1st, Voorhees released a blog post stating that the WSJ worked with ShapeShift to prepare the piece under false pretenses and that the reporters omitted relevant information surrounding the story.
“Overall, the article contains factual inaccuracies, omits significant details about how ShapeShift operates, and reflects a fundamental misunderstanding of how blockchain transactions work,” said Voorhees.
The WSJ article titled “How Dirty Money Disappears Into the Black Hole of Cryptocurrency” begins by stating that “A North Korean agent, a stolen-credit-card peddler and the mastermind of an $80 million Ponzi scheme had a common problem. They needed to launder their dirty money. They found a common solution in ShapeShift.”
Based on an analysis of transactions from ShapeShift’s publicly visible blockchain data over the last two years, the WSJ concludes that at least $9 million has been funneled through the ShapeShift platform. The article largely attributes this to negligence on the part of ShapeShift and points to the company’s anonymous user accounts for creating an easy means for criminals to conduct illicit activity. Voorhees makes the case that not only are the conclusions drawn by the WSJ incorrect, but data from other exchanges which do take user information show similar figures.
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“The WSJ reporters reached out to us months ago asking for friendly assistance on a piece about the crypto industry in general,” writes Voorhees. “Over a period of five months, we were open and accommodating of their questions while in contrast they misrepresented their intentions until very recently. Of the many things I communicated with them over the past months, they included not a single statement from those lengthy discussions, preferring instead to include out-of-context remarks I’d made elsewhere.”
Voorhees points out that even if the $9 million figure were true, it would only account for .15 percent of ShapeShift’s exchange volume over the described time period. He also claims that ShapeShift has a strong record of complying with law enforcement agencies throughout the world, in addition to partnering with other exchanges on an almost daily basis, to track down and block criminal activity. Many suspicious addresses have already been blocked on the platform, and ShapeShift has complied in blocking entire countries put on international sanctions lists. “There is no mention of any of this in the WSJ article,” Vorhees notes.
“Unlike most other exchanges, ShapeShift is a crypto-to-crypto, non-custodial platform. We don’t take custody of user funds, but instead swap our own assets for theirs, at a set price. We don’t touch fiat currency, so users cannot swap their dollars/euros/yen for our Bitcoin/Ethereum/Dogecoin. Not a single dollar, euro, or yen has ever been laundered through ShapeShift. It can’t be done.”
Voorhees argues that the hit piece done by the WSJ is an attack on the unique model designed to respect user privacy which ShapeShift prides itself on. ShapeShift is currently the only financial company in the world that publishes all transactions that go through the platform, which Voorhees points out was ironically used to tarnish the company’s reputation in the article:
“Blockchains and cryptocurrency represent a new, fast-evolving technology and industry. For those who are not real experts, it can be confusing. And the WSJ reporters appear to have gotten confused about how our platform functions. Based on our own analysis of the transactions cited in the article, the WSJ erroneously attributed vast sums of allegedly illicit transactions to ShapeShift in a way that exhibits a profound failure to grasp how blockchains, in general, and our system in particular, really work.”
Voorhees concludes by stating that the accusations made by the WSJ are both false and absurd, further adding that the article is “emblematic of a media industry that cares more about clickbait sensationalism than it does about improving the financial state of mankind.”
“We will push forward, and we’d suggest the WSJ change their title to be more accurate and objective, ‘Less than two tenths of one percent of ShapeShift’s business might be illicit.’”
The post ShapeShift CEO Erik Voorhees Refutes WSJ Dirty Money Accusations appeared first on UNHASHED.