Shapeshift’s spat with the Wall Street Journal is beside the point. Erik Voorhees, CEO of the popular cryptocurrency exchange ShapeShift, is not happy with the
Wall Street Journal. He claims the newspaper made factually incorrect claims about his company and unfairly singled out ShapeShift in a
recent article describing a months-long investigation into the use of exchanges to launder money acquired via criminal means. Whether or not he’s right, the article’s larger point is still valid: a “new breed of cryptocurrency intermediary”— exchanges with unidentified owners and addresses that often let users transact without identifying themselves—are probably making it easier to use cryptocurrency to launder money without
leaving a trace.
The WSJ built its own computer programs to track blockchain transactions from more than 2,500 “suspected investment frauds, hacks, blackmail schemes, and other alleged crimes that used Bitcoin and Ethereum.” It pinpointed $88.6 million that was laundered through 46 exchanges, including $9 million via ShapeShift, which has a US presence but is registered in Switzerland. ShapeShift only recently said it would start asking users for identification. (US regulators have required since 2013 that domestic cryptocurrency exchanges identify their customers.) In a strongly-worded rebuttal posted yesterday, Voorhees accused the Journal of misunderstanding how blockchain transactions work, and misattributing “vast sums” of allegedly dirty transactions to ShapeShift.
But don’t let the spat over a relatively small number distract from the bigger question: just how big of a problem
is money laundering via crypto? It’s hard to know for sure, but it’s a contentious issue between concerned policymakers and crypto advocates, who like to point out that
hundreds of billions are already laundered each year using traditional financial institutions. The
WSJ cautions that its analysis “encompassed only a narrow slice of suspected criminal behavior.” Perhaps the most specific estimate out there came from the director of Europol, who
estimated in early 2018 that criminals in Europe are laundering more than $5 billion a year using cryptocurrencies “It’s growing quite quickly and we’re quite concerned,” he said at the time.
