WSJ Report Estimates Close To $100 Million Laundered Via Cryptocurrency Exchanges

A report by The Wall Street Journal has claimed that more than 46 cryptocurrency exchanges have been used to launder over $88 million over the past two years.


A report by the Wall Street Journal has claimed that more than 46 cryptocurrency exchanges have been used to launder over $88 million over the past two years.

ShapeShift most used exchange

The Wall Street Journal has claimed that it had developed a computer program allowing it to explore the extent of money laundering carried out using cryptocurrencies.

The newspaper revealed that according to its research, $88.6 million worth of funds were laundered using 46 cryptocurrency exchanges, with some of the laundering suspected to be criminal activities.

It further added that authorities were able to confiscate just $2 million of the funds its application discovered.

According to the report, ShapeShift was the favored cryptocurrency exchange for criminals, with $9 million laundered via the exchange, citing ShapeShift’s reputation for enabling users to trade Bitcoin and altcoins anonymously.

Shapeshift has announced that starting next month, it would comply with KYC standards as it looks to reduce the risk associated with trading with criminals.

The WSJ partnered with London-based blockchain forensic company Elliptic which helped them trace the funds from wallets to exchanges.

To identify the intermediary accounts used, the team downloaded and compared the intermediary account details with the wallet addresses of suspected exchanges.

The report singled out ShapeShift, stating that the exchange is responsible for facilitating many tainted transactions, adding that the anonymity championed by the ShapeShift CEO Eric Voorhees is seen as a beacon for criminals, encouraging money laundering on the platform.

The WSJ cited Voorhees’s record of speaking against AML laws and any other regulations that don’t respect the privacy of the people. According to the paper, ShapeShift is unapologetically involved in money laundering activities.

To back up its claims, the WSJ presented some evidence from security researchers who believe that ShapeShift is being used by criminals to exchange Bitcoin for the privacy coin Monero.

The WannaCry attack saw hackers extort millions of dollars in Bitcoin from companies and governments all over the world in 2017, and the WSJ managed to link the Bitcoin extorted by the hackers attackers to ShapeShift’s exchange.

The Wall Street Journal stated that the exchange has yet to change its policies even though it has been one year since the incident occurred and funds were traced back to their platform.

The newspaper claims that the exchange continues to launder criminal funds that eventually became untraceable.

In another example, the WSJ pointed to a fraudulent ICO that raised $2.2 million from investors using Ethereum and disappeared following the crowdfunding.

Following the stolen funds, the WSJ discovered that some of the funds ended up at the KuCoin exchange while $517,000 were traced to ShapeShift where the ETH was exchanged for Monero.

Voorhees criticizes the WSJ report

The CEO of ShapeShift has moved quickly to deny the report by the WSJ, commenting that some of the allegations were cherry-picked. He added that the affected trades represent just 0.2 percent of the exchange’s overall trading volume.

Veronica McGregor, the chief legal advisor to ShapeShift, stated that the exchange has concluded plans to comply with all existing AML and KYC regulations as they look to the future regulation of the industry.

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