Run-ins with regulators was one of the motivations behind ShapeShift’s plan to shut down and convert into a decentralized autonomous organization (DAO), founder Erik Voorhees said.
In an appearance on CoinDesk TV’s “First Mover” Thursday, the day after the crypto exchange’s bombshell announcement, Voorhees also provided more details on what will happen to the company, including its employees.
“Regulatory friction absolutely has a part in this decision,” said Voorhees, who started the exchange in 2014.
“I wish there were more people willing to be brave and to push boundaries and fight for principle instead of just trying to get along and make some profit,” he said, adding that sometimes that means businesses have to operate in a “gray area.”
One of the earliest entrepreneurs in crypto, Voorhees has tussled with regulators since one of his oldest companies, SatoshiDice, paid a $50,000 fine to the U.S. Securities and Exchange Commission in 2014 for failing to register an offering.
The crypto industry is still dominated by centralized companies, but Voorhees said Thursday expects more to follow ShapeShift’s lead.
“Ultimately, if you’re custodial you’re never really bringing the most important attributes of cryptocurrency to your users,” he said, referring to the contradiction between decentralized and centralized companies like Coinbase.
Voorhees himself will no longer be the CEO of ShapeShift and will go from 30% ownership in the company to a 5% controller of its FOX tokens. This still makes him an influential member of the project, but he can easily be outvoted and controlled by other stakeholders, he said.
All existing employees will receive a “healthy” supply of FOX tokens and will get part of the proceeds from selling the company’s assets over time, Voorhees said. He reiterated that this is not the primary concern and that “everyone that invested is here for the revolution” and to “try something new.”
Staff members will end their traditional W2 employment in three waves throughout the year; while some will remain part of the project, others may move on to other projects. All employees have received a “healthy” supply of FOX tokens as well.
Voorhees sounded excited about attracting new talent. “[We’ll] have thousands of diverse people from all over the world,” he said. Instead of working the traditional 9 a.m. to 5 p.m., employees will be able to work flexibly, for example 30 minutes once a month, and they will get paid in FOX tokens.
“It makes them all entrepreneurs,” he said, emphasizing there’s a lot of risk involved in that kind of job but that he has encountered a lot of people who have the right, entrepreneurial, creative energy for such work.
Voorhees wouldn’t comment further on discussions with regulators. From a corporate perspective, the company’s transformation is treated as a liquidation of the company’s balance sheet and the ending of a corporate entity.
Voorhees also commented on Jackson Palmer’s tweet thread calling the cryptocurrency industry a “scam,” and said he agreed with a lot of what the Dogecoin founder said, especially the idea that crypto is “hyper capitalistic.” But to Voorhees, that’s a feature, not a bug.
“It is hyper-capitalistic, and thank goodness there’s actually a system that is hyper-capitalistic that is supposed to be what America was about, […] a free market, capitalist country,” he said. The good thing about crypto is that unlike fiat and the banking establishment, it is purely voluntary, he said, and the industry will remain a “peaceful” place as long as self-custody is maintained.
“If cryptocurrency ends up in a bunch of custodians only, it will lose the most important properties that it has brought,” he said.
CORRECTION (15 July 22:15 UTC): Updated language in the 10th paragraph stating ShapeShift employees have left the organization. Though they are free to, Erik Voorhees said after publication that no one has yet resigned.