The Wall Street Journal has wavered back and forth on their position on cryptocurrency. However, in a recent investigation, they have alleged that there has been a total of $88 million associated with money laundering efforts, which uses 46 different exchanges to do so.
In the report, about $9 million was allegedly laundered as a result of ShapeShift AG, which is a project that Erik Voorhees led and ran that gave users anonymity for a limited two-year timeframe. This exchange particularly stands out because it is the highest amount logged in the investigation by a U.S.-based exchange.
The full investigation involved tracking funds from a total of 2,500 crypto wallet addresses that were historically involved with criminal activities. Though ShapeShift itself is registered in Switzerland, its operation in Colorado made it, “the largest recipient of the funds with a US presence,” according to the report. As a result, there was a list created of “suspicious” addresses that ShapeShift was provided, which have since been banned, according to chief legal officer Veronica McGregor.
To figure out which transactions were fraudulent, the reporters tracked transactions and wallet addresses on the Ethereum blockchain. About $517,000 in Ethereum at ShapeShift was converted to Monero. However, this chain of transactions was ultimately a dead end, so there is no way of knowing what happened to the funds after.
The timing of this report is one of the most interesting aspects of it, considering that ShapeShift only just announced their intention to implement “Know Your Customer” (KYC) protocols next month. McGregor noted that this move was not “in response to any regulatory enforcement action,” but instead as a way to “de-risk” ShapeShift as a whole.
Voorhees was in support of this decision as well, calling it “proactive.” He added, “It was a strategic decision as we believe the risk of not doing so had gotten too great. It was not made lightly.”