Crypto-Leader Voorhees Under Eye of SEC
The US Securities and Exchange Commission (SEC) started an investigation of Erik Voorhees – CEO of ShapeShift AG. Meanwhile, Salt Lending is a virtual currency-collateral lending platform that has an affiliation with Voorhees – which is why SEC is investigating him as well. The SEC intends to determine if Erik Voorhees violated the SEC 2014 settlement that stops him from taking part in the ICOs and token sales.
Prior to starting the investigation of the cryptocurrency lending platform, the SEC scrutinized the EtherDelta founder. The exchange, based on Ethereum blockchain, faced investigation as it did not complete the registration formalities with the SEC. In the past few months, there has been a considerable rise in the number of exchanges working on decentralized platforms. The frequency and ease at which these entrepreneurs launch the blockchain-based companies is a source of concern for the SEC.
ShapeShift Accused of Money Laundering
The SEC accused ShapeShift of allowing alleged criminals to launder money by converting Bitcoin (BTC) into virtually untraceable Monero (XMR). In 2014, the CEO of ShapeShift signed an agreement with SEC after the agency accused him of conducting an illegal public offering for an online gambling company. Voorhees had to pay a fine of $50,000 and agreed not to raise funds in the private markets nor serve as a corporate officer in a firm that raised ICO funds.
Controversy and Voorhees seem to go hand-in-hand. According to Voorhees, exchanges similar to this do not need to fulfill the anti-money laundering protections (KYC/AML) even though it is a standard requirement for most regulators. During one of his interview, Voorhees said, “I don’t think people should have their identity recorded to catch an occasional criminal.”
Although the SEC did not comment, an executive at Salt Lending Holdings confirmed the SEC complaint. Further, the executive notes that Erik Voorhees contributed to the company previously but as of now does not serve any formal role.
The SEC will investigate the $50 million dollars token sale held by Salt Lending Holdings in 2017. A former financial advisor also accused the firm of giving advantageous loans to the insiders in Colorado and losing around $4 million in virtual currency at the start of the year. However, what has made this entire investigation so interesting is the involvement of Eric Voorhees.
When the sale of token took place, Voorhees was one of the directors in the firm as per the listing on Salt Lending Holdings’ official website. However, when SEC sent the subpoena to the firm, it refused to accept Voorhees association with the company as a director even though they used his name constantly in the promotional materials and on the website.