ShapeShift Settles SEC Charges It Sold Crypto Securities

The federal regulator instituted a cease-and-desist against ShapeShift, which dissolved its U.S. crypto exchange in 2021.

AccessTimeIconMar 6, 2024 at 12:58 a.m. UTC
Updated Mar 8, 2024 at 10:44 p.m. UTC
  • The Securities and Exchange Commission filed a cease-and-desist against crypto exchange ShapeShift, barring it from operating as an unregistered dealer in the U.S. that listed crypto securities.
  • ShapeShift offered to settle the charges, which the SEC said it accepted.

The U.S. Securities and Exchange Commission filed a cease-and-desist against ShapeShift, a crypto exchange that previously operated out of Denver, Colorado, but has since shut down its U.S. exchange operations, alleging it operated before 2021 as an unregistered dealer for cryptocurrencies that were securities.

As part of Tuesday's filing, the SEC said it would accept a settlement offer by ShapeShift, which included a $275,000 fine and an agreement that the company would no longer violate the Securities Exchange Act.

ShapeShift offered "at least 79 crypto assets" to its customers, which included "those that were offered and sold as investment contracts," the filing said, though it did not name any specific digital assets as being securities.

However, it said the exchange operated as an unregistered dealer in the U.S. between 2014 and 2021, an accusation similar to the one the SEC brought against other U.S. crypto exchanges like Coinbase, Kraken and Binance.US.

"ShapeShift regularly bought and sold crypto assets for and from its own accounts, carrying inventory in – and holding itself out to customers as willing to buy and sell – the crypto assets offered on," the filing said.

The company shut the U.S. exchange in 2021, the SEC said.

A footnote also noted that the findings in the cease-and-desist "are not binding on any other person or entity in this or any other proceeding."

SEC spokespeople did not immediately return a request for comment.

ShapeShift founder Erik Voorhees emailed CoinDesk a link to a tweet in which he quoted from one of the Federalist Papers.

UPDATE (March 6, 2024, 02:50 UTC): Adds tweet from Erik Voorhees.

Edited by Nick Baker.


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Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.