ShapeShift cooperating with law enforcement not taken well by crypto community

19 Jan, 2019
by Arthur Sillers
ShapeShift cooperating with law enforcement not taken well by crypto community

The Switzerland-based company ShapeShift has published a blog post detailing its interactions with law enforcement. Not only does this show where US law enforcement is in their handling of crypto, but it is already drawing a bit of controversy.

The blog post states it was inspired by a similar report done by Kraken, wherein the prominent exchange elected to give some transparency to how they handled requests for user information, especially from law enforcement agencies.

Both Kraken’s report, as well as ShapeShift’s, indicate that subpoenas have increased dramatically lately. Kraken in fact stated explicitly that the cost of handling subpoenas has become a ‘barrier to entry.’ Market Watch has noted that in 2018 subpoena requests to crypto companies have tripled in 2018.

Read more: US government agencies tripled their budget to fight crypto-related crimes

One important detail is that the majority of subpoenas comes from US law enforcement agencies, including both the SEC and the FBI. CCN described the number of subpoenas as ‘unreasonable’ and cited it directly as a reason that crypto companies are leaving the US for more friendly regulators. On the one hand, crypto companies have cited regulatory pressure as a reason for stopping operations in North America, but this still doesn’t protect a company from being contacted by US law enforcement. ShapeShift is in fact based in Switzerland, but had about a third of their subpoenas issued by US agencies.

ShapeShift is doing what it claims is standard practice, which is similar to Kraken’s approach to regulators. Crypto companies need the good graces of regulators in order to do business in America, which in many cases is the most significant portion of profits. Still, The Next Web has characterized ShapeShift’s behavior as ‘happily serving as an additional surveillance layer on top of the cryptocurrency ecosystem’ which portends that ShapeShift, and similar crypto businesses will ‘soon be considered simply tools for undermining the censorship resistance provided by cryptocurrencies like Bitcoin.’

The bottom line is that crypto companies want to make money, and this is their first goal every time. If crypto purists put their trust in corporations to uphold any principle at the expense of going against government wishes, they will continue to be disappointing. What the crypto community can expect, is that the crypto companies who can streamline their services such that they receive the fewest complaints from law enforcement will be increasingly competitive.

 Read more: Dutch Financial Authorities looking to end anonymous crypto purchases

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Read more about: Kraken


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