Millions of dollars laundered by local blockchain start-up

Last week the Wall Street journal reported how crypto-exchange platforms were being misused for money-laundering purposes. One of the companies mentioned was the Shapeshift AG company of Zug, which employs a number of people at the premises of Crypto Valley Labs in the city.

Shapeshift acts as a sort of decentralised exchange for crypto-currencies, with users able to determine whether they want to exchange more established crypto-currencies such as bitcoin and ether into less known ones such as monero. One difference here is that, unlike bitcoin transactions, those relating to monero are not publicly visible and therefore it is difficult for them to be monitored.

According to information made available to the Wall Street Journal and as result of the newspaper’s own investigations into the matter, over the past two years as much as $88.6 million has been laundered though some 46 crypto-currency exchanges, including $9 million through Shapeshift.

When contacted by a journalist of the Zuger Zeitung, Oliver Bussmann, the chairman of the Zug Crypto Valley Association, and who, until Monday, was listed as chairman of Shapeshift, said he was merely an external adviser and preferred not to comment on this current matter, his role on the company website subsequently being altered to adviser accordingly.

A co-signee for the company, someone from Lucerne, was also listed on the website, someone who has made a career in the software industry and someone who, like Bussmann, preferred not to comment.

When a journalist of the Zuger Zeitung contacted Shapeshift itself, a spokeswoman said that the article as published in the Wall Street Journal was full of inaccuracies, and that the company would be responding in due course.

Those who follow incidents of cybercrime will recall this is not the first time Shapeshift has been mentioned in relation to money-laundering matters. In May 2017 hackers made use the company to launder bitcoins they had obtained after using the WannaCry malware system. At the time, Shapeshift said that this was merely “a misuse of its conditions of use” with all bitcoin accounts associated with the group of hackers subsequently frozen.