ShapeShift: the crypto-exchange settles with the SEC for the sale of unregistered securities

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ShapeShift has opted for a settlement with the SEC, on charges of being an unregistered crypto security dealer. The exchange will pay $275,000 as a civil penalty. 

ShapeShift: the crypto-exchange and the settlement with the SEC for the sale of unregistered securities

ShapeShift offers to settle with the Securities and Exchange Commission (SEC) of the USA, for the accusations of being an unregistered security dealer. The decision comes after the SEC had ordered the crypto-exchange to cease its activity. 

In a document, the US SEC cites a 1946 court case that led to the Howey test, and writes the following:

“The cryptocurrency assets offered by ShapeShift included those offered and sold as investment contracts and, therefore, securities”

Not only that, with this justification, the regulatory authority would also have filed a request for cessation of activities against the cryptocurrency company ShapeShift. 

The crypto-exchange then offered a settlement, which was accepted by the SEC. The agreement stipulates that ShapeShift pay a civil penalty of $275,000 and stay away from any future violations of securities laws. 

ShapeShift: another crypto-exchange accused by the SEC for selling unregistered securities

Founded by Erik Voorhees, ShapeShift operated in Colorado from October 2017 to February 2020, before closing its direct cryptocurrency exchange platform in 2021. Now the company is registered in Switzerland.  

This case of ShapeShift and the SEC’s accusations for selling unregistered securities, adds to the other controversies with other crypto companies. 

First and foremost, there is the endless case of Ripple vs. SEC which had a major breakthrough on July 14, 2023, when the judge ruled that XRP is not a security. However, not even 10 days later, the SEC filed an appeal, which was granted a month later by the Court, but rejected in October 2023.

Basically, the SEC failed to demonstrate the existence of relevant legal issues or substantial reasons for diverging opinions, always on the same issue: crypto and security. 

When it comes to crypto-exchanges, there is the case of Coinbase vs. SEC. It was June 6, 2023, when the US SEC, after attacking Binance, would officially sued Coinbase as well.

Here too, among the various accusations, Coinbase has started to fight on the issue of crypto and security, having to temporarily cancel its offering of some tokens targeted by the SEC. 

The case of Kraken

In addition to ShapeShift, Ripple, Coinbase, and Binance, Kraken’s crypto-exchange has also been targeted by the SEC. 

And indeed, the investigation against Kraken has always concerned the sale of unregistered securities and its staking service, and already in February 2023 it seems to have reached an agreement with the SEC of the USA. 

Basically, Kraken had to close its crypto staking operations following a charge requested by the SEC. This is a fine of 30 million dollars.

Recently, however, Kraken rejected another lawsuit filed by the SEC, defining it as a “worrying precedent” of excessive authority.