In late 2025, the U.S. Treasuryโs Office of Foreign Assets Control (OFAC) fined ShapeShift $750,000 for processing transactions in heavily sanctioned jurisdictions.
The Violations: Between 2016 and 2018, ShapeShift facilitated over 17,000 transactions (totaling ~$12.6 million) for users in Iran, Cuba, Syria, and Sudan. The vast majority of these users were located in Iran.
Compliance Failure: OFAC noted that ShapeShift had access to IP address data showing where these users were located but lacked a sanctions compliance program to block them. The penalty was reduced from a potential maximum of nearly $40 million because the company cooperated, the violations were deemed "non-egregious," and ShapeShift had already ceased corporate operations to become a DAO (Decentralized Autonomous Organization).
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In 2018, The Wall Street Journal published a major investigation into ShapeShift, alleging that the exchange was a prominent hub for money laundering.
The Allegations: Because ShapeShift historically allowed users to swap cryptocurrencies without creating accounts or verifying their identities (no KYC protocols), the WSJ claimed that almost $90 million in illicit funds from Ponzi scheme operators, extortionists, and North Korean hackers had flowed through the platform.
The Response:
Voorhees strongly denied the framing of the article, stating that ShapeShift complied with all applicable laws and used advanced blockchain forensics rather than standard identity checks. However, shortly after the regulatory pressure intensified, ShapeShift was forced to implement mandatory KYC (Know Your Customer) rules, which Voorhees later admitted cost the platform 95% of its user base.
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And this guy the team initially rugged
$VVV at the start??
You guys want to trust this prick & claim this is decentralized / game changing?
Gtfo lmao.