As a report by the Wall Street Journal suggests, a total of 88 million US dollars have been washed since 2016 through the use of crypto exchanges. Exchange ShapeShift is particularly in focus. Its CEO Erik Voorhees opposes the presentation and accuses the newspaper of distributing FUD.
On 28 September, the Wall Street Journal, one of the most important US daily newspapers, published a report on the role of crypto exchanges in money laundering activities. Under the title “How Dirty Money Disappears Into the Black Hole of Cryptocurrency”, the magazine digs up a general account with the crypto sector. The crypto exchanges in particular are not doing well in the analysis.
A total of 2,500 wallets examined according to the Bitcoin news
In the course of the research, the Wall Street Journal team examined the deposits of a total of 2,500 wallets. The selected wallets were known to be involved in illegal business. With the help of the blockchain company Elliptic, the journal was able to track how users transferred wallet deposits to Bitcoin news crypto exchanges.
As one of the main recipients of the illegally acquired money, the journal identified the Swiss crypto exchange ShapeShift. More than nine million of the 88 million US dollars laundered since 2016 are said to have passed through ShapeShift. One reason for this could be that until recently the crypto exchange enabled anonymous trading of crypto currencies. KYC standards for ShapeShift will only come into effect next week, on 1 October.
ShapeShift CEO Voorhees defends himself
The Wall Street Journal particularly highlights the trolls of CEO Erik Voorhees. Voorhees had repeatedly spoken out against KYC and AML regulations and stressed the freedom of transactions. The journal now uses these statements to underline that money launderers have an easy game to play with the crypto exchange.
Voorhees himself spoke a little later directly about the criticism levelled against him and ShapeShift. Understandably, he didn’t let the accusations sit on his shoulders. Instead, he takes a stand against the Wall Street Journal, which he describes as “poorly researched and misleading”.
2/2 Author cherry-picked data, excluding facts contrary to vilification narrative. $9m figure is less than 0.2% of our volume over the time period. Meanwhile global money laundering through banks is 2-5%. Op-ed forthcoming.
He also posted a graphic on Twitter that compares the amount of money laundered by ShapeShift with the amount laundered by banks. He equates the nine million laundered in the last two years with the 2.7 billion US dollars laundered through banks in one day.
Even though this comparison is enormously limping at several points, the message behind it becomes clear to all readers. Especially representatives of the traditional financial industry are still watching the crypto sector with suspicious eyes. Accordingly understandable is the criticism of Voorhees, the journal would ride on the old money laundering eggs against crypto currencies. On the other hand, the introduction of KYC at ShapeShift shows that the stock market was not immune to money laundering in the past.