SEC Charges ShapeShift for Selling Crypto Securities
ShapeShift ceased its U.S. exchange operations in 2021, according to the SEC filing.
The U.S. Securities and Exchange Commission (SEC) has taken action against ShapeShift, a crypto exchange formerly based in Denver, Colorado, alleging that it operated as an unregistered dealer for crypto securities before 2021. ShapeShift has since ceased its U.S. exchange operations.
The SEC's filing includes a cease-and-desist order against ShapeShift, asserting that the exchange conducted business as an unregistered dealer for crypto assets, some of which were classified as securities. In response to the charges, ShapeShift has offered a settlement, which the SEC has accepted. As part of the agreement, ShapeShift will pay a fine of $275,000 and commit to adhering to securities regulations moving forward.
While ShapeShift has not issued an official statement in response to the allegations, founder Erik Voorhees shared a quote from the Federalist Papers in a tweet, hinting at the exchange's stance on the matter.
"In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control… https://t.co/5b43KVYakz
— Erik Voorhees (@ErikVoorhees) March 6, 2024
The SEC alleges that ShapeShift functioned as an unregistered dealer between 2014 and 2021, facilitating transactions involving various crypto assets, including those considered investment contracts. The exchange reportedly engaged in buying and selling crypto assets from its accounts, effectively acting as a dealer. Notably, ShapeShift ceased its U.S. exchange operations in 2021, according to the SEC filing. The exchange's will response to regulatory challenges in the U.S. crypto market.
The SEC's action against ShapeShift highlights the regulatory environment surrounding crypto exchanges and underscores the importance of compliance with securities laws. The development comes amid increased regulatory scrutiny of the crypto industry, with exchanges facing growing pressure to adhere to regulatory requirements.
The outcome of ShapeShift's settlement with the SEC could have broader implications for the crypto industry, potentially influencing regulatory approaches to crypto exchanges and securities laws.
