ShapeShift initially distinguished itself in the industry as a non-custodial exchange that did not require customers to register or open accounts. Its team also initially used pseudonyms, with Voorhees utilizing the name ‘Beorn Gonthier’ – a Tolkien reference – until 2015. Similarly, in 2015 ShapeShift announced that it would stop serving New York residents after the state implemented the BitLicense, a regulation that would have required it to collect identifying information about customers. However, in 2018, the company launched a membership program that it said would eventually become mandatory for all of its users. It remains a non-custodial exchange.
When ShapeShift launched, the company positioned itself as a “cryptocurrency vending machine” that notably enabled users to purchase more cryptocurrencies than just bitcoin. The purchase process entailed customers requesting a particular cryptocurrency, providing a deposit address, depositing another cryptocurrency into a deposit wallet and then receiving their desired coin. No personal information was collected over the course of the purchase.
In March 2015, ShapeShift raised $525,000 in seed funding from early industry investors Barry Silbert and Roger Ver. In September of the same year the company raised an additional $1.6 million from Silbert’s Digital Currency Group, Ver and angel investors Bruce Fenton, Trevor Koverko and Michael Terpin. In 2017, ShapeShift closed a $10.4 million Series A funding round led by Earlybird Venture Capital, a Berlin based firm. Other participants included Lakestar, Blockchain Capital, Pantera Capital and Access Venture Partners in addition to FundersClub, Digital Currency Group and Voorhees himself.
In 2016, ShapeShift lost around $230,000 in three thefts over the course of four weeks in March and April, which it claimed were carried out by a company employee. ShapeShift later said that it had discovered that an employee stole 315 BTC and it subsequently fired the responsible party. After their dismissal, the ex-employee sold security information such as ShapeShift’s IP address to an outside hacker, who then stole 154 BTC, 5,800 ETH and 1,900 LTC in two further hacks. Because ShapeShift is a non-custodial exchange, no customer funds were lost during the hacks.
In 2018, ShapeShift announced its membership program, citing a desire to reduce risk at the company during a time of “uncertain and changing global regulations.” It subsequently undertook a significant rebranding process in 2019 which saw it move from its shapeshift.io website to a platform that aggregates all the products Voorhees and his employees had been working on since the company launched. The new platform allows users to buy, sell, trade and over 50 digital assets. To use the platform, users must link their account to a hardware wallet such as Trezor or KeepKey, the latter of which was acquired by ShapeShift in 2017.