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Shuttered crypto exchange ShapeShift agreed to pay a $750,000 penalty to the U.S. Treasury Department over allegations it violated sanctions laws by allowing users in countries like Cuba, Iran, Sudan, and Syria to transact through its platform.
What’s the Scoop?
- Alleged violations: The Treasury said ShapeShift processed over $12.5 million in crypto transactions for users in sanctioned jurisdictions between 2016 and 2018.
- No compliance program: The agency claimed ShapeShift had no sanctions compliance procedures in place and only implemented one after receiving a subpoena from OFAC. Investigators said ShapeShift “had reason to know” it was serving users in restricted countries, including via IP address data.
- Exchange history: ShapeShift was founded in 2014 by crypto O.G.
Erik Voorhees and became known for enabling anonymous token swaps without requiring KYC. It later ran into regulatory issues and transitioned to a DAO before shutting down its centralized operations.
Bankless Take:
The decade-old nature of sanctions violation allegations against ShapeShift did not stop Treasury from pursuing a settlement. According to OFAC, ShapeShift had reason to know that its users were located in sanctioned jurisdictions based on their IP address data.
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