---
title: ShapeShift (Company)
description: An overview of the ShapeShift Exchange and Organization pre-decentralization.
published: true
date: 2021-10-08T21:38:16.473Z
tags: shapeshift, shapeshift history, history, centralized shapeshift
editor: markdown
dateCreated: 2021-11-25T22:45:46.428Z
---

# ShapeShift (Company) History

## Formation and Early Stages

ShapeShift was a U.S. based cryptocurrency exchange registered in Switzerland in 2014. The company, under the leadership of Erik Voorhees and co-founder "Jon Shapeshift," launched its initial version in the summer of 2014 with Litecoin as the first altcoin available for instant swaps to and from Bitcoin. Initially ShapeShift was "primarily intended to be used as an API" according to archives.

> ShapeShift is a new piece of infrastructure in Bitcoinland. It is how digital currency exchange should work. From start to finish you can change currencies in under ten seconds, no account required. - *About Us Page Circa Aug. 2014*

A few months after the initial launch, Peercoin, Darkcoin, and Dogecoin was added to the list of asset offerings. By September 2015 the exchange offered 40 different assets with over 900 different trading pairs--by far the most of any crypto exchanges at the time.


### Early Funding & Digital Currency Group Investment

Voorhees, as founder and CEO of ShapeShift, personally kick-started the company with an investment of $300,000 in early 2014. Later that year, Roger Ver came on as an angel investor, and in March 2015, ShapeShift received its first VC-backed funding with a $525,000 seed investment by Digital Currency Group, a New York-based fund commonly known as DCG, led by Barry Silbert.

### Launch of CoinCap.io, Tool and API for Real-Time Market Data

ShapeShift launched CoinCap in 2014 as a tool for reliable real-time market data of over 1,000 cryptocurrencies. As one of the oldest market data provider that is still operational today, CoinCap is able to provide an impressive 11 years worth of historical data for free via the API.


### CoinPayments Partnership

In May 2015 ShapeShift entered into a partnership with CoinPayments.net, a leading cryptocurrency merchant system still in operation today.

> "We are excited to offer simple and frictionless conversions to our customers using the ShapeShift API,” said CoinPayments.net CEO Alex Alexandrov, “This partnership gets us one step closer to a system where customer can pay in any currency they choose and vendors settle in what they find most convenient for their business."

### iOS App Release

On June 9th 2015, ShapeShift announced the launch of its platform on iOS, boasting that iPhone users can now trade "every major digital asset at the touch of a button."

> “Most exchanges hold customer funds and extract personal information, which is an archaic and insecure model,” added Voorhees. “Mt. Gox was a teachable moment for everyone in the Bitcoin community and ShapeShift has innovated these problems out of the picture. We are both faster and more secure. This is real consumer protection - no funds or sensitive information is stored on our servers nor on the user’s phone in case it is damaged, destroyed or stolen. Digital currency has brought to humanity a more secure infrastructure, and so we build in that spirit.”

### Spells of Genesis Cards

On August 11th, 2015, Spells of Genesis, a trading card and arcade game that integrated Bitcoin and blockchain, announced its plans to release and sell a limited quantity of ShapeShift-inspired cards. These extremely rare cards gave an early glimpse of the forecoming NFT boom, nearly half a decade later. Plans to burn and auction off some of these cards were announced and approved in November 2021.

>“Digital goods in games have always had fake scarcity,” explains ShapeShift’s CEO Erik Voorhees, “the company can always create more, and nobody really knows how many exist, making it impractical to value or price. These blockchain-based digital assets, however, are truly mathematically scarce, and will become commoditized and traded like other financial assets. Spells of Genesis is breaking exciting new ground and we’re thrilled to be working closely with them.”

33 of these rarest and oldest NFTs have been ported to Ethereum and can be viewed on [OpenSea.io](https://opensea.io/assets/0x82c7a8f707110f5fbb16184a5933e9f78a34c6ab/46243891414939301).

### Other Notable Partnerships & Integrations

* Vaultoro 6/3/15
* Bitwala 6/15/16
* Wirex 9/22/16
* OpenBazaar 1/7/17
* Unocoin 03/2017
* FIO Protocol 08/25/2020

## Regulatory Roadblocks and Opposition

### New York's BitLicense

In July 2014, the New York State Department of Financial Services (NYSDFS) announced its plans to regulate businesses involved in virtual currency activities. The controversial "BitLicense" was met with fierce opposition when finalized in 2015, including ShapeShift, ultimately leading to the announcement that it would cease offering services to New York residents as a result of regulatory framework. Voorhees described the customer data requirements imposed by the BitLicense as “Orwellian” and a reckless data collection effort.

### Washington State Senate Bill 5031

In August 2017 ShapeShift announced that it would cease operations in the State of Washington, citing the BitLicense-like regulations passed by the state senate.

### Mandatory KYC Data Collection

In September 2018, ShapeShift began to implement a voluntary KYC program and announced that KYC would soon be mandatory for all. In a heartfelt message written by Voorhees, he made it clear that this decision did not come easy, and that it was a pro-active measure being put in place as it was becoming more and more clear as to which direction the regulatory bodies were hell-bent on imposing.

> "We still firmly believe that individuals, regardless of their race, religion, or nationality, deserve the right to financial privacy, just as they deserve the right to privacy in their thoughts, in their relationships, and in their communications. Such privacy is a foundational element of a civil and just society, and should be defended by all good people. We remain committed to that cause and it is best served if we are smart about our approach.

This was a significant turning point in ShapeShift's history and future, as crypto's no-KYC, no-account, privacy advocating darling exchange finally sucummed to the growing interest and regulations in the digital assets sector.

Although the exact figures are not public, ShapeShift's volume predictably took a significant hit, and many long-time users migrated elsewhere.

### WSJ Accusations and Factual Response

On September 28th, 2018, Wall Street Journal made waves around the Blockchain and FinTech world with an "expose" titled "How Dirty Money Disappears Into The Black Hole Of Cryptocurrency."

Perhaps leveraging the growing tensions at the time between North Korea and the U.S. and South Korea as bait for pageviews, the article began:

> “A North Korean agent, a stolen-credit-card peddler and the mastermind of an $80 million Ponzi scheme had a common problem. They needed to launder their dirty money. They found a common solution in ShapeShift.”

The article attempted to link ShapeShift to $9m in laundered money by criminal organizations and that ShapeShift was complicit and knowingly allowed these types of activities.

The blockchain industry quickly rallied and refuted the WSJ article, as it was clear that the journalist did not know how to analyze chain data, made deceptive claims, and omitted relevant information.

#### ShapeShift's Response

Voorhees, unsurprisingly, took to himself to refute and defend ShapeShift. Some key points illustrated by Voorhees include:

> - Overall, the article contains factual inaccuracies, omits significant details about how ShapeShift operates, and reflects a fundamental misunderstanding of how blockchain transactions work.
> - $9m (even if it was true) is 0.15% of ShapeShift’s exchange volume during the described time period;
> - We have a strong record of complying with law-enforcement requests, providing valuable assistance in over 30 investigations in 13 different countries all over the world;
>- We work with other exchanges on an almost-daily basis to identify and block thieves and criminals, through a self-policing group ShapeShift created to protect the users and industry;
>- We block entire countries on the sanctions lists;
>- We have an internal anti-money laundering program that uses blockchain forensics that are far more advanced (and we would argue, effective) than asking someone for their “name and address”;
>- An objective observer will find no complacency here; ShapeShift’s record (based on facts) compares favorably against any peer, within the crypto industry or without.

The entire rebuttal can be read [here](https://shapeshift.com/newsroom/shining-light-on-wsjs-attack-on-shapeshift-and-crypto).

#### CipherBlade's Investigation

Perhaps even more important than ShapeShift's own response, was that of CipherBlade, one of the most respected blockchain forensics and investigation agency. In a third party review by CipherBlade, aptly titled, "How Truth Disappears Into the Black Hole of Shoddy Journalism," the conclusion was clear: **"WSJ used flawed methodology which generated highly inflated claims that were used to single out one exchange for transactions that are neither unusual nor illicit.""**

The highly detailed forensic review went on to rip apart WSJ's claims on ShapeShift one by one. The full article can be read [here](https://medium.com/cipherblade/how-truth-disappears-into-the-black-hole-of-shoddy-journalism-bbff158cd271).

### Privacy Coin De-Listings

In November 2020, three privacy-focused coins XMR, DASH, and ZEC were de-listed from the ShapeShift platform "to further derisk the company from a regulatory standpoint."

## Funding

Since the founding of ShapeShift, there have been four known funding rounds for a total amount of $12.8mil.

| Announced | Round | # of Investors | Amount Raised |
| -------- | -------- | -------- | -------- |
| Mar 29, 2017 | Series A | 9 | $10.4M|
| Mar 29, 2016 | Seed 3 | 2 | N/A|
| Sep 8, 2015 | Seed 2 | 7 | $1.6M|
| Mar 10, 2015 | Seed 1 | 2 | $525K|
| Mar 10, 2015 | Angel | 1 | N/A|
| Mar 10, 2015 | Personal | 1 | $300K |
Notable Investors: Earlybird Venture Capital, Blockchain Capital, Digital Currency Group, Bitfinex, Lakestar Venture Capital

## Acquisitions

### Portis Acquisition

Portis, an Israli-based software wallet company founded in May 2018, was acquired by ShapeShift in April 2020 for an undisclosed amount. Voorhees not only praised Portis' SDK, as it was already integrated with the existing ShapeShift platform, but their core values.

>"After integrating Portis’ SDK into the ShapeShift Platform last year, we recognized the depth of their tech and how closely our values aligned. They really built something special, making self-custody extremely easy. As our relationship evolved, acquiring Portis became a natural next step."

### Bitfract Acquisition

Bitfract, founded in 2018 and based in Texas by CEO Willy Ogorzaly, was a platform that allowed users to convert their Bitcoin into a variety or "basket" of digital assets in a single transaction. The platform enabled investors to simplify the buying, selling, and re-balancing of portfolios through a simple transaction while allegedly saving up to 80% in fees.


On Aug 9, 2018 it was announced that Bitfract was acquired by ShapeShift for an undisclosed amount.

### KeepKey Acquisition

KeepKey was founded in 2014 "to provide thousands of users with the most secure, convenient, and easy-to-use hardware wallet available for storing bitcoins and other digital assets."

In August 2017, ShapeShift acquired KeepKey for an undisclosed amount. Shortly after, KeepKey was integrated directly into ShapeShift's platform, allowing for a full vertical integration of self-custody (Portis for software, KeepKey for hardware).

KeepKey is often brought up by journalists and tech reviewers as one of the leading hardware wallets in safety and quality up along with Trezor and Ledger.

Most of the software is [open source](https://github.com/keepkey), and there are plans to open source the hardware as soon as possible. It is still unclear how (or if at all) the manufacturing and distribution aspect of KeepKey will continue as the company fully decentralizes.

## Path to Decentralization

The ethos and vision of ShapeShift since its inception was made very clear: privacy and financial equality for all. The financial regulatory bodies of America unfortunately did not see eye-to-eye with the early pioneers of blockchain, and ShapeShift along with all the other exchanges ultimately had bowed to pressure.

The enforcement of KYC data collection was the end of an era for a legendary "first of its kind" financial system that was very endeared by many early adopters.

In January 2021, ShapeShift announced the removal of its KYC requirements and the integration of decentralized exchanges into its platform. Read more: [ShapeShift Integrates Decentralized Exchanges, Removes KYC Requirements](https://shapeshift.com/newsroom/shapeshift-integrates-dex)

### No-KYC DEX Launch & FOX Token

With KYC enforcement in place, transaction volume predictably began its rapid decline as centralized exchanges like Bittrex, GDAX, and shortly after Binance began to rapidly gain much of the world's global volume.

Little did the world know at the time, that a small project called Uniswap would very shortly and swiftly change the paradigm of the industry again. Although early attempts at a completely decentralized exchange certainly was respectable in its own right, there were numerous usability and liquidity issues that prevented mass adoption.

Uniswap's liquidity and AMM protocols catapulted the DeFi landscape while ShapeShift was still confined within the restrictive walls of regulation.

To those who really knew ShapeShift, its leaders, and its values, it came as no surprise when the company quickly re-aligned itself the announcement and launch of a non-custodial, no-KYC, _no fees_ platform that aggregated and utilized the protocols and liquidity of various DEXes.

**Recommended Reads:**

* [ShapeShift is Decentralizing. ShapeShift is decentralizing to build… | by Erik Voorhees](https://erikvoorhees.medium.com/shapeshift-is-decentralizing-639bb4c82fc8)
* [ShapeShift Launches Decentralized Cross-Chain Trading via Thorchain](https://www.prnewswire.com/news-releases/shapeshift-launches-decentralized-native-bitcoin-trading-through-integration-with-thorchain-301267955.html)
* [An Introduction to THORChain for Bitcoiners | by Erik Voorhees](https://erikvoorhees.medium.com/an-introduction-to-thorchain-for-bitcoiners-3f621bf0028e)
* [Rethink, Renew: ShapeShift CEO Erik Voorhees to Rebrand Crypto Exchange](https://www.coindesk.com/markets/2019/02/17/rethink-renew-shapeshift-ceo-erik-voorhees-to-rebrand-crypto-exchange/)

ShapeShift's "FOX" token was also launched in this hectic era for ShapeShift as an ERC20 utility-token that gave the holders various benefits on the platform, such as the gas-rebate program.

The company, however, struggled to gain ground as the entire industry entered its longest and arguably the most important bear market in its short history. It was during this "crypto winter" when many projects, platforms, and protocols were laying down the foundation and the infrastructure needed to mature the market past the speculation phase and into the utilization phase.


### The Announcement

Winter eventually thawed into spring and by late 2020 the industry was once again booming with chatter, optimism, breakthroughs, and major protocol-level improvements. Ideas and ambitions, that were only text and diagrams on whitepapers just a few years ago, slowly but surely began to show glimpse and teasers of the endless possibilities that blockchain and distributed peer-to-peer technology could open up.

**Recommended Reads:**

* [ShapeShift Lays Off 37 Employees in a “Deep and Painful Reduction”](https://defirepublic.com/shapeshift-lays-off-37-employees-in-painful-reduction/)
* [Overcoming ShapeShift’s Crypto Winter and the Path Ahead](https://medium.com/shapeshift-stories/overcoming-shapeshifts-crypto-winter-and-the-path-ahead-73f59bb8cf13)

With the DeFi revolution already in full swing, it was time for the DAO revolution. In July 2021, ShapeShift publicly announced its plans to decentralize the entire company while conducting one of the largest airdrops in history of FOX tokens, which would eventually be used for decentralized governance processes.

The decision to decentralize a company of this size, history, range of services and products, number of employees, physical ownership of materials, etc., was an ambitious one that could be used as inspiration or a case study for future companies that are thinking of decentralizing.

If all goes as planned, centralized ShapeShift should no longer be existing on January 1st, 2022. ShapeShift Foundation is in the process of formation to pick up processes that are necessary and to support the DAO.

ShapeShift AG is now ShapeShift DAO.

**Recommended Reads:**

* [ShapeShift is Decentralizing, Erik Voorhees](https://erikvoorhees.medium.com/shapeshift-is-decentralizing-639bb4c82fc8)
* [ShapeShift to Decentralize Entire Company; Largest Airdrop in History Shifts Governance to the Community](https://shapeshift.com/newsroom/shapeshift-to-decentralize-entire-company-largest-airdrop-in-history-shifts-governance-to-the-community)
* [ShapeShift to Shut Down, Airdrop FOX Tokens to Decentralize Itself Out of Existence](https://www.coindesk.com/business/2021/07/14/shapeshift-to-shut-down-airdrop-fox-tokens-to-decentralize-itself-out-of-existence/)
* [ShapeShift, DAOs and the Future of Work](https://www.coindesk.com/markets/2021/08/18/shapeshift-daos-and-the-future-of-work/)

<iframe width="560" height="315" src="https://www.youtube.com/embed/X90dZRp785A" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>

[Learn more about ShapeShift DAO.](https://docs.shapeshift.one/en/shapeshift/shapeshift-dao)

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bounty: true
amt: 30
signee: 0xef4fd55584434903aa6fc9baa61eacdde5355da0

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