Last week the WSJ had a detailed piece on Shapeshift, the Exchange/Wallet. Among a broader allegation that almost $90 million in criminal money was laundered through over 46 crypto exchanges, the article also alleged that Shapeshift might have helped launder around $9 million, over a period of two years.
Today, Erik Voorhees, the Shapeshift CEO came out swinging with his side of the story in a blog post
. Makes a lot of sense, and makes for some fascinating reading, if you have ten minutes.
The cynical view here is pretty simple and brutal - those who can, do; those who cannot, write.
In all fairness, most mainstream journalists, like with most of mainstream everyone, are still coming to terms with crypto. Here is recounting some first-hand experience; Some months ago, let us just say somewhere in Asia, as a fly-on-the-wall during an interview between Zooko Wilcox of Zcash and one of the supposedly more ‘crypto-savvy’ journalists, it was disheartening to see that the first question from the journalist was, to paraphrase “I understand blockchain, it has immense potential. What is the point of bitcoin”. To his credit, the admirable Zooko handled this with aplomb, in spite of his jet lag post a transcontinental flight.
Mainstream journalists have a tough task, keeping up with developments in crypto. Even practitioners in the industry who live, breathe and eat this stuff are barely able to keep up with the relentless 24x7 crypto news cycle across the various channels. Also, in order to talk and write and propound about this stuff, one needs to be in deep. It is not a coincidence that some of the most informative material out there comes from practitioners themselves, such as Eric Meltzer, or Nic Carter or Jimmy Song.
While media would have you believe that we are all waiting for institutions to come in and start buying and adopting cryptos, Institutions, apparently, have been buying up crypto at a steady pace over the past couple of quarters
. Most of these trades, especially pretty much anything over $100k, happens on large OTC platforms, such as Cumberland, or Goldman-promoted Circle. Traditional exchanges, quite simply, do not have the market depth to service such trades. The OTC market continues to be super attractive, and although we have moved from the ‘2 under/2 over spread”, where if you wanted to sell you would get a 2% discount to the market, and if you wanted to buy you would have to pay a 2% premium to the market, the opportunity is still very attractive as more and more institutions such as hedge funds, as well as single and multi-family offices continue to enter this market.
Also, worth mentioning, the EEA (Enterprise Ethereum Alliance) and Hyperledger alliance. The two consortiums were pretty much in a dogfight over the whole ‘enterprise blockchain’ space, but a change of management at the former prompted a change of heart apparently. What this actually pans out to be remains to be seen.