An investigation into money laundering conducted by The Wall Street Journal traces back to ShapeShift, a cryptocurrency exchange registered in Switzerland. The report claims that crypto trading platforms are used anonymously by hackers seeking to dodge regulators.
The ShapeShift business is registered in Switzerland, whose laws boast an anonymity feature for companies and clients, making it difficult to investigate fraud such as money laundering.
Meanwhile, ShapeShift’s office and operations are located in Denver in a commercial building occupied by several other startups and marijuana companies, the report reveals. ShapeShift’s Colorado operating address may suggest the company must comply with U.S. regulations. ShapeShift executives including CEO Erik Voorhees have a Denver address.
According to the WSJ story, ShapeShift gives anonymous users the ability to convert bitcoins, which can be traced by authorities, into privacy coins like Monero, the latter of which is much more difficult to track. The New York publication reports that ShapeShift allegedly processed approximately $9 million in criminal activity over the last two years.
Meanwhile, research cited in the story points to hackers behind malware dubbed ransomware that was used in the global WannaCry attack, which was led by South Korean hackers who extorted millions of dollars in crypto from victims. The bitcoins that were converted into Monero were reportedly linked to ShapeShift exchange.
The WSJ researchers developed computer programs that tracked crypto funds across more than 2,500 instances of fraud, hacking, phishing and other criminal activity. The analysis, which covers only a fraction of the total number of crimes involving digital currencies, has identified the equivalent of $88 million in stolen funds across nearly four dozen crypto trading platforms.
Voorhees has denied the allegations against his exchange. Meanwhile, the WSJ story recalled the ShapeShift chief previous stated:
“I don’t think people should have their identity recorded to catch an occasional criminal.”
ShapeShift Chief Legal Officer Veronica McGregor said in an interview with NewsBTC in September that the company had begun requiring users to pursue identity verification as of Oct. 1 in order to remove the risk of the exchange being abused by criminals.