ShapeShift, the cryptocurrency exchange decided to collect user ID information. However, the company stated that the controversial decision was a “proactive” step in order to reduce legal risks. The authorities hadn’t force it upon the exchange. The news came to light after a statement from the CEO and founder Erik Voorhees.
The ID Collection Drive
Voorhees provided his justification for the move to collect IDs. The move garnered widespread criticism from the cryptocurrency community. The latter saw the exchange’s earlier policy of not requiring a formal ID as a great way to protect privacy.
Some community members are of the opinion that the new “membership” model was to blame. The company, they believe, initiated the ID collection initiative on account of threats from the regulators.
Voorhees, however, is an advocate of privacy rights himself and a critic of know-your-customer (KYC) regulations.
Furthermore, he added:
“It was a strategic decision as we believe the risk of not doing so had gotten too great. It was not made lightly.”
Voorhees stated that his firm spent “months of legal work and over a million dollars of legal expenses on this topic alone.”
The Membership Model
Voorhees published a blog outlining the “tokenized” membership model. The ID collection initiative is a means of providing special perks for loyal users. However, critics opined that the CEO should shut the company down, as this was better than compromising his privacy principles.
However, the CEO, said that he made the decision for ID collection with a lot of deliberation and care. He said, “We remain committed to the struggle for financial privacy and sovereignty for all humans, and will continue to be tactical about how we further that cause.”
He further added:
“The status quo is to invade the privacy of millions of innocent people in order to potentially decrease the risk of a few bad actors. We think this is both unjust and ineffective.”
Want the latest crypto news? Join our Telegram Channel