Erik Voorhees, the founder and CEO of “instant” cryptocurrency exchange ShapeShift, recently informed his followers via Twitter that his company decided to share how many disclosure requests they’ve received from law enforcement.
Kraken inspired us to convey similar transparency in law enforcement requests. Voila... "Pulling Back The Curtain: How ShapeShift Handles Law Enforcement Compliance" https://t.co/aGVqeLvR4C @krakenfx @jespow #bitcoin #blockchain— Erik Voorhees (@ErikVoorhees) January 18, 2019
ShapeShift "Assisted With 60 Law Enforcement Inquiries" In 2018
Voorhees, who is the founder and one of the previous owners of Satoshi Dice, a bitcoin (BTC) gambling website, noted that US-based crypto exchange, Kraken had “inspired [his firm] to convey similar transparency in law enforcement requests.” As CryptoGlobe reported on January 6, Kraken’s management had received 475 disclosure requests from regulators during 2018. Most of the requests had reportedly come from authorities in the US, UK, and Japan.
In an official blog post, ShapeShift’s team noted:
Because of the nature of our business, ShapeShift regularly receives requests from various law enforcement agencies. In the traditional financial world, this request process is typically opaque. In 2018, ShapeShift assisted with 60 law enforcement inquiries from around the world.
Similar to how regulators from several different jurisdictions contacted Kraken’s management for disclosure regarding various aspects of their business operations, ShapeShift’s blog explained that legal requests “often take the form of subpoenas from a court (in the US) or other government agency, but each country has its own formal legal process.”
ShapeShift Only Responds To "Official Legal Requests"
Because finance is a “heavily regulated” industry, “getting subpoena requests happens often,” the blog stated. ShapeShift’s blog revealed that “in relation” to the total number of inquiries law enforcement agencies send each year, the “requests related to cryptocurrency transactions are miniscule.”
A subpoena is “a court-ordered request” which requires an organization to respond by providing the necessary information, the blog noted. It also explained that one type of subpoena “requires testimony before ... a legal authority.” The second, most common type of subpoena, which ShapeShift “regularly receives,” are requests for “documents, materials or other types of evidence.”
According to ShapeShift, the company has ”always made all transactions through our system public.” After processing customer transactions, the details of the transfer are published on ShapeShift’s website and via the firm’s APIs.
Law Enforcement May Ask For Users' Emails, IP Addresses
The exchange further noted that this type of transparency in financial transactions is quite helpful. For instance, it is easy to review the transaction history when “the victims or other parties involved have identified that their funds related to the incident may have reached ShapeShift.” Clarifying that ShapeShift’s management only responds to “official legal requests,” the company’s legal and compliance team gathers all the required information (as mentioned in the subpoena).
Notably, “most investigations are confidential”, meaning that ShapeShift is not allowed to disclose any details regarding the subpoenas from authorities. Some of the information requested includes “crypto address (in or out of our system), transaction IDs, or it could include names, emails, IP addresses, [and] coins/asset” transfer details, the exchange detailed.