ShapeShift Settles Charges with SEC

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Cryptocurrency exchange ShapeShift has reached a settlement agreement with the United States Securities and Exchange Commission (SEC), agreeing to comply with the agency’s order to cease its operations and pay a penalty.

The exchange had stopped the relevant operations in 2021 by transitioning into a decentralized autonomous organization (DAO). According to the SEC’s accusations, ShapeShift operated as an online platform functioning as a “vending machine” for cryptocurrency from 2014 until January 2021.

As the “market maker” and counterparty, ShapeShift was able to generate profits from the price spread on trades.

The SEC’s order states:

“ShapeShift would purchase the crypto asset that the customer wanted to sell and sell the customer the crypto asset that they wanted to buy.”

ShapeShift was originally incorporated in Switzerland and based in Colorado for several years. At its peak, the exchange offered at least 79 assets, some of which were defined by the SEC as securities under the Securities Exchange Act of 1934 and the Howey test.