ShapeShift crypto to pay $275K to US SEC alongside cease and desist order
- US SEC is at loggerheads with ShapeShift for operating without registration.
- This cease and desist order applies only to ShapeShift’s operations as a dealer prior to early 2021.
- The exchange should pay a civil money penalty of $275,000 to the SEC payable to the general fund of the US Treasury.
Even as cryptocurrency markets continue to bleed following the spectacular nick of Bitcoin price of the $69,000 all-time high, the US Securities and Exchange Commission (SEC) continues to oversee the market with a firm hand. In the latest, the financial regulator is at loggerheads with a Switzerland headquarters trading platform operating in the US.
Also Read: Bitcoin Price Outlook: Almost $521 million in total liquidations as BTC hits new ATH
ShapeShift becomes the latest SEC casualty
In an official filing, the US SEC has issued a cease and desist order against crypto exchange ShapeShift, citing operating without registration, among other violations.
The @SECGov issues cease and desist against @ShapeShift https://t.co/D0IPRCK3Bl
— Dan Spuller (@DanSpuller) March 5, 2024
According to the financial regulator, at some point in its operations, ShapeShift acted as a market maker for certain assets (at least 79), serving as the counterparty to every transaction. With this it marketed itself as a crypto “vending machine,” generating revenue by effecting exchanges with customers at an exchange rate favorable to ShapeShift.
For the layperson, this means that the exchange charged its customers more for the crypto assets than it paid to acquire them through the “spread” on its customer transactions. Among these crypto asset offerings were tokens considered securities, which was a violation of the law considering ShapeShift is not registered as a dealer.
ShapeShift never registered as a dealer with the Commission or operated pursuant to any exception or exemption from registration.
Notably, it only covers the period when ShapeShift was centralized, between 2014 to 2021.
According to the SEC, the exchange's violations include operating as a dealer without registration pursuant to Section 15(b) of the Exchange Act. Notably, the charges are almost similar to what the financial regulator brought to Coinbase, Kraken and Binance.US.
Besides the cease and desist order, the commission also demanded a $277,000 penalty, paid to the US treasury within 14 days. The exchange has agreed to settle the matter, according to the SEC.
ShapeShift did not immediately respond to FXStreet request for a comment.
This story was corrected on March 6 at 17:10 GMT to say the commission also demanded a $275,000 penalty, paid to the US treasury within 14 days, not $270,000.
Author
Lockridge Okoth
FXStreet
Lockridge is a believer in the transformative power of crypto and the blockchain industry.
