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ShapeShift.io CEO Erik Voorhees was recently interviewed by Paul Buitink, Jop Hartog, and Tuur Demeester on the deBitcoin weekly hangout, and he discussed his company’s recent reaction to the finalized BitLicense. Last week, it was announced that ShapeShift.io would no longer offer its services to the good people of New York, which now joins North Korea as one of the few jurisdictions where the instant exchange is blocked. Voorhees explained why ShapeShift.io made this decision, and he also shared his thoughts on New York Department of Financial Services (NYDFS) Superintendent Ben Lawsky’s move to the private sector.

ShapeShift.io blocking New York customers for ethical reasons

As Voorhees explained during the interview, ShapeShift.io is no longer available to New York customers because the company finds the BitLicense to be “unethical in its requirements.” The ShapeShift.io CEO described the company’s options once the bitcoin-centric regulations were finalized:

“Since [the BitLicense] is becoming law, we had two choices. We could either do something we felt was unethical and continue to serve New York, or we could block New York and leave that market. So, we — of course — had to do the latter.”

The main objection ShapeShift.io had with the BitLicense was that it required bitcoin companies to collect a large amount of private information about their users. The personal information of customers would then be available to any government regulator who wanted to see it. Voorhees went on to explain the ironic nature of this requirement in the new regulations:

“First of all, that information is not needed for the transaction itself — so it’s not like we’re collecting that information for some useful purpose. Users don’t need to provide that to us right now, and collecting it endangers the users because personal information should remain personal wherever it can. And because hacks are so common, because identity theft is so common; it’s really dangerous to collect private information from people unless you need to.”

BitLicense a problem for identity theft?

As Voorhees pointed out, one of the main issues with the BitLicense is that it requires bitcoin companies to collect personal, identifying information about users when that collection of data isn’t necessary for a particular service to function. The BitLicense removes the ability for businesses to process bitcoin transactions for users without taking on the added liability of collecting personal information. Bitcoin companies are essentially barred from allowing users to use the blockchain to send money without filling out long forms with all of their personal info.

Voorhees also explained the seriousness of the identity theft problem to the deBitcoin audience:

“When I was actually researching this a little bit, I was quite amazed at how big of a problem identity theft is. At least in the US — as of a couple of years ago from the government’s own statistics — identity theft was a $24 billion problem. $24 billion of known losses to identity theft in one year in just America. That amount was greater than the amount of losses for all other kinds of theft, including home burglary, car theft, and all forms of property theft combined.”

Ben Lawsky will help you navigate laws he created

Many individuals in the bitcoin community have become annoyed and angered at Ben Lawsky due to his intentions of creating a new digital currency consulting firm that will help businesses navigate the very laws that he helped develop at the NYDFS. It’s obvious that Voorhees agrees with those outraged individuals, and he did not hold his tongue when asked about the subject in the deBitcoin interview:

“This is the very definition of crony capitalism. Someone in a privileged position in government making a bunch of rules, then leaving to profit off the rules they made by charging people the entrance fee to the museum of horror that they created for them.”

Voorhees then noted how this sort of activity is allowed to happen out in the open:

“It’s not even a secret. He just says this when he’s on CNBC and stuff, and no one thinks for a second, ‘Oh wait, isn’t that kind of corrupt?’ . . . No one even challenges it. It’s [become] so common in the US — so normal — that people don’t even question it. So that’s the state of capitalism in the land of the free.”

No other bitcoin companies have decided to block New York customers up to this point, so perhaps some of them are willing to pay Lawsky’s toll in order to gain access to a New York userbase.

22 COMMENTS

  1. FU lawsky. Bitcoin will survive your terrible regulation because it's global and decentralized and therefore does not need to ask for your permission to exist.

    • You remind me of people who use police scanners to show up at police calls and fires dressed in a homemade superhero outfit.

      • You remind me of people like lawsky, who love creating regulations, and then starting companies that charge people to help them with those regulations, crony capitalism at it's best.

          • Oh great comeback…
            I call you pro regulation and you call me an idiot…all you do is call people names like a child, which is sad given how very old you are.

  2. To get a balanced and rational review of the situation look at Jerry Brito and Coin center instead of some agenda-pushing cultist like Vorhees who misrepresents many things and does not understand how regulations and regulators do things.

    • Milly if you don't mind I'd like to begin by reminding our listeners that you are actually a grossly overweight 55 year old white male who bathes infrequently. To some this fact may not matter. To others . . . for me personally . . . it makes a difference knowing you are who you are. I have more empathy and sometimes, after a few beers, I find myself deferring to you and once, I even caught myself fantasizing about you and me going to a bitcoin conference together – hand in hand.

      But then I look away from your picture (if that really even IS your picture with the yellow hair and orange blouse) and realize that I was objectifying you. This is certainly not my style, but even I make mistakes.

      Anyway . . . I'm 100% positive that Mr. Vorhees understands "how regulations and regulators do things". He is actually one of the few public Bitcoin figures who is brave enough to be public about his opinions.

      Milly your statements make you look a full notch dumber than the last time you made yourself look like a horse's ass.

      Get a hobby? Learn to swim? Go vegan? Adopt? Meditate?

      I'm here for you man.

      John Barrett
      Host of Bitcoins and Gravy

      • Many people have come out against the Bitclicense, including myself. people like Jerry Brito at Coin Center understand how things work and the reasons behind regulation. Vorhees is naïve and has no experience in dealing with regulators and he misstates their motives. Vorhees misrepresents things because he is promoting his agenda and not Bitcoin. He uses Bitcoin as a way of gaining attention.

        As fir the rest of your comments, you are just ignorant.

      • Hah amazing comment, more people need to call out milly for the very old troll that he is. Here is 1000 bits for your humor:) @ChangeTip

  3. Ben Lawsky has engineered himself a nice cosy private business consulting companies through the very regulations he created while on the public purse.

    Bitcoin companies have to pay BitLicense fees to NY state – starting with the initial $5k application fee and ramping up from there – and additionally pay Lawsky's consulting fees to help them navigate through the process (or try to wade through it all by themselves).

    Or just don't deal with NY customers.

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