Crypto Exchanges Saw More “You’ve Been Served” Notices and Subpoenas in 2018 Than Ever Before


A recent report that was released the cryptocurrency exchange called ShapeShift as the company discovered the submission of over 18 Subpoena summons from US regulatory bodies as of 2018.

While this seems a little bit unusual, considering the United States is sending these legal files to a company based in Switzerland. According to further evidence, the United States Government has been responsible for 30 percent of requests made to ShapeShift in 2018.

Top Of The Charts – Why The US Authorities Are Always Ranked At Top

What is also demonstrating this is new evidence from the international cryptocurrency exchange, Kraken.

Kraken, having used December as a time to release its report on transparency. The company reported that out of all countries Kraken does business in, the United States much up more than 66% of all requests to the exchange.

Kraken's report went on to more thoroughly emphasize that, while the United States take the majority of all requests, it is only a small percentage of Kraken's overall population. With the superpower only making up 20 percent of its whole user base in stark contrast to the vast majority, which is in Europe.

“Overall, the US constitutes about 1/5 of our clients, but a disproportionate 2/3 of all requests. American agencies prove to be far more active and are far less in the way . of surgically precise. It wouldn't be surprising to find that the same subpoenas go out to everyone in the hopes that a legal match will be found,” Kraken concluded.

This disproportionate ratio of users to reports is largely due to the fact that there's overwhelming enforcement of Anti Money Laundering Policies and ‘Know Your Customer‘ (KYC) request forms from local and federal wings of the US government. And this increasingly probing method is not unique to cryptocurrencies, it's just the latest victim.

There have been a large number of other sectors, including in the world of Financial Technology (FinTech), and all of them have been pressured to some degree by the US regulatory and legislative authorities placing a significant amount of pressure on them to handle a large expanse of its regulatory issues over a prolonged span of time.

Speaking in an interview on Bloomberg, Arjun Sethi, the co-founder of the venture capital investment company, Tribe Capital. Sethi argued that the investors began to place greater focus on any company's ability to manage the pressure from outstanding and new regulations due in large part of the growing demands from the United States government.

Sethi carried on to say that:

“So, when we meet with these various companies, along with speaking to them about their product, market and its team/s, we spend a certain degree of time on how exactly they will execute it within what every regulation-based environment they'll inhabit”

What this means is hiring the right kinds of people and that they focus on regulatory compliance and best practice measures.

It is such a matter of concern and consideration for cryptocurrency based communities that major institutions like Coinbase are alleged to have hired more than 20 employees whose sole task is to deal with regulatory enquires.

The Solution – Move Our of the US?

While one of the alleged solutions for companies is to move operations out of the US. Now while this is a skin-surface feasible solution, the US government would still be able to get to you.

It doesn't matter if you're based inside or outside of the US, or base yourself in more regulatory freedom, the US would still be able to file KYC and AML requests for the likes of Cryptocurrencies, FinTech or finance businesses.

One of the examples of this is ShapeShift and is only the latest one. While the company is based in Switzerland, it still boasts a large number of data requests which come from the US in the majority of these instances.

For a company like ShapeShift, as an example, which is a large scale cryptocurrency trading platform, and specializes in a much more regulatory free, flexible marketplace for cryptocurrency traders operating internationally. As a result, it's far more possible for regulatory and policing authorities to request some level of user data, largely because the transactions that take place on the platform are wholly transparent.

The Firm Elaborated On This:

“They are able to conduct these searches in the greater interests of transparency, ShapeShift has long ensured that any and all transactions on our platform operate in an otherwise public system, this is intended contrast in comparison to any kind of bank or conventional financial institution. Once the customer's orders have been completed by the system, the transaction details are saved, and subsequently published on our website and made available through our APIs.

Our decision to relocate operations to outside of the United States does not provide us, nor startup companies with a safeguard from US regulatory requests from its government. When taking into consideration the long term perspective, it is far more likely that regulatory compliance becomes a core discussion point for angel investors, venture capital organizations thanks to the high associated with costs in dealing with and subsequently processing all of these regulatory requests on an annual basis.”

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