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ShapeShift Settles with SEC for $275,000 Over Failure to Register

Crypto exchange ShapeShift has reached a settlement with the U.S. Securities and Exchange Commission (SEC), agreeing to pay a fine of $275,000 to resolve allegations that it operated as an unregistered dealer.

The SEC announced the settlement on March 5, revealing that ShapeShift had failed to register with the commission while offering assets classified as securities between 2017 and 2019. According to the SEC, ShapeShift’s offering included crypto assets sold as investment contracts, thereby constituting securities.

As part of the agreement, ShapeShift agreed to a cease-and-desist order and the payment of the $275,000 fine to resolve the SEC’s allegations. Following the announcement, ShapeShift’s native token FOX experienced a decline of over 9%, dropping to $0.078, as reported by CoinMarketCap.

The settlement comes after ShapeShift’s decision in January 2021 to overhaul its business model, discontinuing direct crypto asset exchanges through its platform and ceasing to act as the counterparty to customer transactions. By July of the same year, ShapeShift began winding down its corporate structure.

ShapeShift justified its restructuring by emphasizing its commitment to immutable, non-custodial decentralized finance, a principle it has championed since its inception. As part of the restructuring process, the exchange distributed over 60% of its 1 billion FOX tokens to more than one million clients.

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