[HN Gopher] No More KYC with ShapeShift
___________________________________________________________________
No More KYC with ShapeShift
Author : wslh
Score : 72 points
Date : 2021-01-06 18:53 UTC (4 hours ago)
(HTM) web link (erikvoorhees.medium.com)
(TXT) w3m dump (erikvoorhees.medium.com)
| vizzah wrote:
| Applause. KYC is the most abused wealth verification requirement,
| worst modern plague of freedom, personal data protection and
| privacy of wealth accumulation.
| A4ET8a8uTh0 wrote:
| I assume that Treasury will have their own view of this, but I
| generally applaud attempts to shake status quo. I will be
| checking on you guys from time to time now.
| csomar wrote:
| It's a mouse and cat game. As of now, there are no KYC rules
| for decentralized exchanges, and thus they are under the radar
| of the law. It'll take a couple of years before the SEC/FTC
| catches up with them, by that time they would have already
| found another loop hole.
| ur-whale wrote:
| > Treasury will have their own view of this,
|
| What will be interesting to see is if these views are
| physically enforceable.
|
| Having more technical details would be interesting.
| asdfasgasdgasdg wrote:
| As long as the officers of ShapeShift or its shareholders are
| within reach of the U.S. government, those rules are
| physically enforceable.
| ur-whale wrote:
| lol, good point, it's not like actual rules matter anymore.
| vlmutolo wrote:
| Decentralized trading seems like it would be a problem from the
| perspective of paying your taxes. Or maybe not. Maybe it's just
| the honor system.
|
| Keep track of all your assets, what you bought and sold them for,
| and tell your accountant if you have one. Or learn the tax laws
| surrounding capital gains.
| rmah wrote:
| Did ShapeShift migrate to a Uniswap-like dex?
| cblackstock wrote:
| No, we're simply integrating with DEX's on the platform.
| ShapeShift is moving away from handling the exchange and
| turning that functionality over to outside providers.
| delaaxe wrote:
| But then why not use the DEXes directy?
| tigereyeTO wrote:
| ShapeShift's software sets it up so that customers DO use
| the DEXes directly.
| tigereyeTO wrote:
| CISO of ShapeShift here.
|
| If our values speak to you, and you're a security researcher - WE
| ARE HIRING
|
| https://shapeshift.com/careers
|
| In liberty,
|
| --Michael
| ajkdhcb2 wrote:
| I hope to see more support for monero considering the supposed
| privacy values
| thomaszander wrote:
| This is an often seen opinion and there is some nuance to
| this idea.
|
| Monero doesn't enable privacy by default, but its known as a
| privacy coin. The first means that people could be unaware of
| the extra steps they need to take to get privacy, but the
| second is the risky one.
|
| Monero is known as a privacy coin and this makes it the
| target of governments that indeed made ShapeShift start to to
| KYC a year or more ago.
|
| Monero is unduly targeted for standard features because
| governments don't like perfect privacy...
|
| The good news is that privacy does not have to be built in to
| a coin for it to be capable of giving privacy. If we reverse
| the Monero situation we might get something that is actually
| useful for the majority of us. A coin like Bitcoin that
| doesn't have more than semi-privacy can have mixing added to
| become private.
|
| Now, mixing as historically done on BTC is both expensive and
| centralized, which has caused several servers to be
| confiscated and people arrested. Again, governments really
| don't like what you do with your money being private.
|
| I'm personally a big fan of https://cashfusion.org ticks all
| these boxes. It is built on a semi-private (bitcoin-like)
| coin and it solves the other problems as well with a mix
| (sorry, fusion) costing you nearly nothing.
| ajkdhcb2 wrote:
| Privacy is much more difficult than people think - when it
| comes down to technical details, it is required for privacy
| to be default, otherwise it simply doesn't work. Even when
| every single transaction is mixed, and values are hidden,
| there are STILL not-insignificant risks. If it is not
| mandatory then it is just not good enough, even for people
| that are not doing high-risk things.
|
| >Monero doesn't enable privacy by default, but its known as
| a privacy coin. The first means that people could be
| unaware of the extra steps they need to take to get privacy
|
| That is erroneous.
| thomaszander wrote:
| > when it comes down to technical details, it is required
| for privacy to be default, otherwise it simply doesn't
| work.
|
| Absolutely, we are in agreement.
|
| The point I was making is that the coin itself, the base
| protocols, adding these privacy options makes it the
| difference between a generic payment protocol and one
| specifically made to evade the governments controls.
|
| There being a way to do great privacy while leaving the
| coin itself to be a generic payment coin gives you the
| best of both worlds.
|
| The point you make is still true, it is required for
| privacy to be default on. And this can be included in one
| wallet that people use for this purpose. Now its the
| choice of wallet that makes the privacy, not the choice
| of coin.
| meowster wrote:
| > Monero doesn't enable privacy by default
|
| It does in fact enable privacy by default. If you want to
| show someone the details of a transaction or an address
| balance, you have to provide viewkeys.
|
| > I'm personally a big fan of
|
| Now your comment reads like an attempt to shill, which
| would explain the misinformation about Monero.
|
| According to HN's rules, I have to assume you have better
| intentions than that. Please explain what you meant, since
| I must have misunderstood you.
| thomaszander wrote:
| > It does in fact enable privacy by default.
|
| Ok, my statement was maybe too black/white and you jumped
| on top of that. The point is that Monero has Privacy
| level / mixin settings, the default is not completely
| open, but certainly doesn't qualify as super private
| either.
|
| > Now your comment reads like an attempt to shill
|
| I shared a link to a product that I feel is very
| successful in reaching privacy. I have no ties to this
| product (though I have used it).
| twodayslate wrote:
| Any plans to get added to 3commas?
| tigereyeTO wrote:
| We've got connections for sure
| https://www.cameo.com/v/LP_Hemal_W
| Permit wrote:
| I'm trying to better understand Shapeshift's business model.
| How do you make money?
| csomar wrote:
| Some kind of a miner fee: https://shapeshift.com/miner-fees I
| think to be able to execute the transaction.
| tigereyeTO wrote:
| Miner fees are charged by the various blockchain networks,
| and not by ShapeShift.
|
| If the Bitcoin network is charging 0.00066 BTC for a
| transaction, ShapeShift passes this charge through to users
| transparently.
| tigereyeTO wrote:
| ShapeShift is a platform that provides users with much more
| than just trading: we are a mobile wallet, a hardware wallet
| provider with KeepKey, a DEX, and an easy place to manage
| your crypto assets while retaining control of your private
| keys. And, for developers, we're building a powerful software
| development kit (SDK). ShapeShift is building an ecosystem
| with the FOX Token at its core, and there are many
| opportunities to ensure a sound business model within it. We
| are looking to continually build value into FOX Tokens for
| the benefit of its holders while establishing a solid
| financial foundation for our company and our employees.
| mbesto wrote:
| Can you simplify a bit? Can I take my USD dollars and buy
| crypto on your platform or not? If not, how would I obtain
| crypto and leverage those solutions that you support?
| tigereyeTO wrote:
| ShapeShift partners with Banxa to process debit and
| credit card transactions. This allows you to buy BTC
| directly with USD, and the BTC is delivered directly to
| your own wallet with keys that are in your control.
|
| Note that Banxa performs their own KYC for their own MSB
| services.
|
| Once you have some crypto, you can then trade it for
| other crypto with a few taps on your smartphone, or
| clicks in your browser.
|
| Search your smartphone's app store for ShapeShift and
| give it a whirl yourself :)
| mbesto wrote:
| > Note that Banxa performs their own KYC for their own
| MSB services.
|
| Ok and so does Coinbase. So at any point I, an American
| citizen, must do some level of KYC.
|
| Is the idea that I can simply buy Crypto from another
| exchange and then send the hash to another wallet on your
| platform (where KYC isn't performed)?
|
| > Search your smartphone's app store for ShapeShift and
| give it a whirl yourself :)
|
| No offense, but I won't. It's hard for me to trust a
| wallet that clearly (or technically unclearly) is
| operating in a grey area of the law.
| vizzah wrote:
| "Remote" job, physical requirements: "The employee must
| occasionally lift and/or move objects up to 50 pounds." ;-)
| tigereyeTO wrote:
| You gotta lift your laptop every now and then :P
| silentsea90 wrote:
| Can you please share your thesis for ShapeShift from an equity
| upside standpoint?
| tigereyeTO wrote:
| I'm not sure I follow the question, but I think you're asking
| about comp and whether employees have opportunities to earn
| equity.
|
| We do!
|
| Every ShapeShift employee has equity and has opportunities to
| earn more. It is vitally important that our employees benefit
| from ShapeShift's successes and I'm proud to be a ShapeShift
| employee.
|
| More important to me than equity is the feelings of
| accomplishment and camaraderie that we already feel for
| building such a great platform that holds user privacy and
| self-sovereignty above all else.
| silentsea90 wrote:
| I am sorry for the unclear question. I was curious about
| the bull case/potential upside for ShapeShift equity.
| Specifically, what makes you believe (if you do): 1)
| ShapeShift will succeed as a business long term 2)
| ShapeShift will capture value as a business
|
| Broadly, where do you see the company in 5-10 years :) What
| makes you bullish about it!
| mbesto wrote:
| > Bad guys: we are not your friends. There are various ways of
| surveilling blockchain transactions that are far more effective
| than KYC. Not only will we continue to cooperate with authorities
| where required by law, but we actively collaborate with industry
| groups to monitor and root out sinister activity. We are here to
| protect good people, and as such, stand resolutely against evil.
|
| "Against evil"...now where have I heard that before...
|
| Translation: "We, a private corporation, get to determine what
| good and evil is. YMMV how/why you qualify for either or."
| oh_sigh wrote:
| What's the alternative to every individual determining for
| themselves what they view as good and evil?
| mbesto wrote:
| How is this an example of that? The _company_ is explicitly
| saying that _IT_ is determining who is a bad actor and who is
| not.
| googlryas wrote:
| A company is a collection of individuals. It wouldn't make
| sense to say an individual can determine X but 10
| individuals voluntarily organizing together can't determine
| X.
| mbesto wrote:
| > A company is a collection of individuals.
|
| What's your point? Facebook is a collection of
| individuals, but if Zuck wants political ads barred from
| his platform he can snap his fingers and make it happen.
|
| Having individual private companies become the arbiters
| of justice for good/bad actors is not a sound
| resolution...especially when it comes to fraud/identify
| theft.
| googlryas wrote:
| In that case, individuals join a collective knowing that
| they are deferring their viewpoints to the shareholders.
| And the individuals are free to leave at any time if they
| feel their views aren't aligned with the company view.
|
| And what's the alternative? Who is the decision
| outsourced to if not the individual/company?
| thomaszander wrote:
| And the worst they can do is choose to not do business with
| them...
|
| Whereas you doing full KYC with most companies, who are by
| law also forced to determine who is a bad actor, doesn't
| scare you?
| ur-whale wrote:
| The article is light on technical details, but if Eric managed to
| actually pull that off in a truly decentralized manner, this is
| quite an accomplishment, congratulations.
| otterley wrote:
| Regulations have a way of evolving to meet people's attempts to
| evade them. Whatever ShapeShift is doing might work for a while,
| but in the long run it looks like a cat-and-mouse game.
| spurdoman77 wrote:
| Everything is cat-and-mouse game in the end.
| jeffreyrogers wrote:
| Seems unlikely that they are actually going to be able to get
| around KYC.
| StavrosK wrote:
| Why would they need KYC if they don't handle any money?
| parliament32 wrote:
| If they don't handle any money, how do they make money?
| zadler wrote:
| They wouldn't, but they might still be considered to be
| running an exchange if they keep a centralized orderbook. So
| i don't know how they will get around that.
| tigereyeTO wrote:
| ShapeShift has never had an order book.
| markkat wrote:
| >When an individual is accused of a criminal offense, it may be
| reasonable to dissolve their privacy to some degree in the search
| for truth about that offense. >However, KYC dissolves the privacy
| not of certain specific individuals accused of wrongdoing, but
| the privacy of all individuals, none of whom have been accused of
| anything. >We can do better than that as a society. Warrantless
| surveillance of all people cannot be our standard.
|
| So glad to see this view rising up. When so many private and
| public parties are required to collect my private data, how can
| it remain private? I've had unemployment claims made in my name
| this year due to a breach, and it was on me to fight the fraud
| that would harm me. The collection of private data does not
| protect us, it results in a honeypot and puts us at risk.
| oh_sigh wrote:
| I have no idea how this system works - how are you harmed if
| someone claims unemployment in your name?
| thomaszander wrote:
| ... they get the money you could have received.
| underdown wrote:
| You still have to pay taxes on unemployment income
| RcouF1uZ4gsC wrote:
| Did this get checked by a lawyer before posting?
|
| Reading this, I get the hacker vibe: "The law says this, but I
| came up with this clever hack so it does not apply to me."
|
| Unfortunately for this view, the law and judges who apply the law
| care a lot about intent, and are not very impressed by "hacks" of
| the law. Advertising that you are doing an end-around KYC, is
| something that a judge will find very interesting if this comes
| to court.
|
| In addition, KYC is a big priority of the US Treasury department
| and there is pretty bipartisan support for it.
|
| Basically, the US Treasury Department does not want any company
| to facilitate large money transfers anonymously. If you are doing
| that, they will likely come after you, despite whatever clever
| legal "hacks" you may think you have.
|
| I don't see this ending well.
| delaaxe wrote:
| But then they would have to go after all the other
| decentralized exchanges like Uniswap etc. no?
| tigereyeTO wrote:
| First, it's important to note that we will continue to KYC
| users when they trade directly with us as the counterparty
| (this is our old model and we have to KYC in this case). When
| it comes to DEX trading, it means we are not part of the trade;
| we are not a custodian, a counterparty, or an intermediary of
| any kind. Thus, we are not regulated in that case because we
| are not engaged in a regulated activity and are in full
| compliance with regulatory guidelines.
| brokensegue wrote:
| how will they make money if they aren't involved in the
| transaction and won't transact with the customers?
| vlovich123 wrote:
| Yeah, this is an astute observation. If they're taking a cut of
| the transaction, I suspect they'll still fall under KYC (either
| because the legislation today is sufficient or because it'll be
| changed as soon as they become a threat).
| simon_kun wrote:
| they will release their own governance token through an
| airdrop. It's the new way to fund decentralised startups - no
| need for VC. Essentially it's the equivalent of an IPO on day
| 1.
| aidenn0 wrote:
| IPOs raise money in exchange for equity, they don't create
| any profits.
| simon_kun wrote:
| I understand. Governance tokens are equity (usually with
| voting rights), and are used to generate a capital base
| for a decentralised product (think: crowdfunding). Not
| all governance tokens are airdropped and the secondary
| market for said tokens often results in them appreciating
| over time. I would suspect shapeshift to fund itself and
| generate wealth for the founders through doing this both
| at the point of issuance and over time.
| vlovich123 wrote:
| With no incoming revenue, it seems like you've just
| described a pyramid scheme, albeit with extra technical
| steps. Can you help me understand the difference?
| thomaszander wrote:
| The various companies use such coins as a way to do the
| same thing as shares in a company. In fact, shares are
| just a pyramid scheme too, if you assume there is no
| obligation from the company to pay dividends or such.
|
| The difference between coins and shares is such that
| shares can only legally be owned by a very very small
| number of people that are licensed to. You can ask them
| to buy and give you a certificate, but you yourself
| probably are not one of the few that can own stock.
| (series 7 in https://www.investopedia.com/articles/financ
| ialcareers/07/se...)
|
| On the contrary, coins like these can be bought and sold
| by anyone. And this makes the balance very different.
| Should you see the company do stupid things, you can sell
| your coins in a very short time for nearly no cost and
| without asking for permission or waiting for banking-
| hours. Noteworthy is that you can sell them to anyone on
| the Internet.
|
| Naturally, such companies (and there are quite a lot
| doing this today) pay out dividends as well. Typically to
| coin-holders addresses they arrange an air-drop. So
| simply you own 1000 and they pay 10 extra to that
| address.
|
| Other strategies are buy-backs when the company is
| profitable which are meant to make the price go up
| because there is more demand than supply.
|
| As you can see, there are quite a lot of similarities to
| stocks, and certainly also differences.
| aidenn0 wrote:
| > In fact, shares are just a pyramid scheme too, if you
| assume there is no obligation from the company to pay
| dividends or such.
|
| Yes, a company that promises to never make a profit, pay
| out any dividends to its shareholders, or buyback stocks
| is a pyramid scheme. Your statement here is a bit like
| saying a credit card is just like bank robbery, if
| there's no obligation to pay off the balance.
| thomaszander wrote:
| notice that the disingenuous statements came not from me,
| but from the parent comment who asserted (without basis):
|
| > With no incoming revenue []
|
| I didn't want to be an ass to point this out, seems I
| confused you instead.
| brokensegue wrote:
| ok but making a coin doesn't solve the lack of revenue
| problem which is I thought aidenn0 was proposing they
| would. it seems totally unrelated to the question at
| hand. Edit: Simon not aiden
| spurdoman77 wrote:
| So essentially a security scam.
| udfalkso wrote:
| For certain ERC20 tokens... but great move, and hopefully they
| can extend it to Bitcoin and others soon as well.
| zadler wrote:
| Bitcoin is challenging because sadly most wallets don't support
| custom transactions like metamask does.
___________________________________________________________________
(page generated 2021-01-06 23:02 UTC)