Anonymous Crypto Exchange ShapeShift Set to 'Shapeshift' to 'Mandatory Account' Exchange

Siamak Masnavi

On Tuesday (4 September 2018), Erik Voorhees, founder and CEO of anonymous digital asset exchange ShapeShift announced via a blog post that his company was introducing a membership model ("an advanced loyalty program"), which requires collection of personal information; membership is optional for now, but becomes mandatory soon (before the end of the year).

This is how ShapeShift announced the news on Twitter:

The tweet linked to a post by the CEO on the exchange's blog. In that post, Voorhees acknowledges that it seems strange ("curious") for a privacy-conscious company like ShapeShift, which he says is known as “the exchange without accounts" with a pioneering business model designed to "reduce friction and protect customers" to suddenly move to an account-based membership model. 

He says there were three reasons for this decision:

  • Many users were demanding account-related features, such as transaction history or email notifications.
  • They wanted to be able to build a tokenized royalty program, "in which the engagement between a business and its customers can itself become an asset."
  • They were under regulatory pressure (meaning to enforce AML laws).

Here are the key details of ShapeShift's membership model:

  • Members receive various benefits (which will evolve over time), e.g. better exchange rates or higher transaction limits.
  • The most basic level of membership, Level 1, is free.
  • Higher Levels of membership (2-5), which are not available yet, require ownership of specific amounts of FOX tokens (which are standard Ethereum tokens); also, members will receive FOX tokens as a reward in various way (to be decided later). Note that ShapeShift is not doing an ICO.
  • "Membership requires basic personal information to be collected. Today, Membership is optional, but it will become mandatory soon."

To open an account, you need to have one of the following forms of ID: passport, government ID, or driver's license.

Voorhees seems to realize that at least some of ShapeShift's customers are going to be disappointed and saddened by this ID requirement:

"Yes, that last detail sucks. We would prefer if the collection of personal information was not a mandatory element. We still firmly believe that individuals, regardless of their race, religion, or nationality, deserve the right to financial privacy, just as they deserve the right to privacy in their thoughts, in their relationships, and in their communications. Such privacy is a foundational element of a civil and just society, and should be defended by all good people. We remain committed to that cause and it is best served if we are smart about our approach."

There are a few of the angry reactions on Twitter to this move by ShapeShift:

And here's the contrarian view from PJ Kershae, who is an early stage investor in ShapeShift: