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In the letter
- Monero and Dash are no longer available on ShapeShift’s trading platform.
- Monero is the world’s most popular privacy coin, while Dash has optional privacy features.
- U.S. government agencies have hired blockchain companies to track Monero transactions.
ShapeShift has removed an important privacy coin Currency from its platform, a ShapeShift spokesperson said Decrypt via Twitter. Dash, a Bitcoin Cash competitor with optional anonymity features, is also removed.
Unlike standard cryptocurrency exchanges, ShapeShift is a portal for buying, selling and exchanging cryptocurrencies while retaining ownership of their private keys.
Founded in Switzerland, known for banking laws that protect financial privacy, ShapeShift has a long history of browsing through government intrusions. For example, it ceased to offer services in upstate New York in 2015 rather than complying with state regulations that require digital currency companies to record certain user details. It later withdrew services from Washington state due to similar regulations.
While ShapeShift did give slightly to the regulators in 2018, starting to respect the “know your customer” rules, privacy coins would still seem to be philosophically suited to ShapeShift.
Currency, which is traded under the initials XMR, is the largest privacy coin by market capitalization, worth more than $ 2 billion. Transactions on the Monero blockchain are obscured through a coin blending process, making it difficult for others to see the sender’s or recipient’s wallet addresses or even the amount. It is the exact opposite of Bitcoin, which allows anyone to view pseudonymous transactions.
Monero’s built-in privacy makes some elements within the US government uncomfortable, especially since XMR is a preferred by hackers. And they’re trying to address potential vulnerabilities in the mixing process to make transactions more transparent.
The Department of Homeland Security has awarded CipherTrace a contract with the blockchain forensic firm create a way to track Monero transactions. CEO Dave Jevans told Mathew Aron, host of The Decrypt Daily, that his company was able to develop a probabilistic approach to determining the addresses involved in transactions. Hoping to get something more solid, the IRS paid CipherTrace Chainalysis and Integra FEC competitors a total of $ 1.5 million to develop their own Monero cracking solution.
For reasons like these, major US exchanges like Gemini and Coinbase have not made Monero available for trading, despite being the 14th largest cryptocurrency by market capitalization and having healthy trading volumes elsewhere. (Monero is, however, available on the U.S.-based exchange Kraken.)
In July, Coinbase CEO Brian Armstong indicated there is regulatory pressure for cryptocurrency companies not to offer XMR:
“A lot of it is behind the scenes conversations where [regulators] I’m kind of saying, ‘We really don’t think you should do this. And then we have the conversation: “Well, are you telling us that you don’t like it or are you telling us that you will sue us if we do?” “
It is unclear whether the removal of Monero from the platform was a business decision for ShapeShift or a regulatory one. ShapeShift founder and CEO Erik Voorhees said so Decrypt, “We chose to remove Monero months ago, but I can’t provide any further comment as to why at this time.”
Tim Copeland helped create reports for this article.
Editor’s Note: This article has been updated to include comments from ShapeShift CEO Erik Voorhees.
