ShapeShift, a cryptocurrency exchange that makes it possible to swap any one of dozens of digital tokens for any other, has raised $10.4 million in a Series A round led by Berlin-based Earlybird Venture Capital.
The funds will be used to expand ShapeShift’s team and release two "groundbreaking" new products this year, the startup said in a news release on Wednesday.
Founded in 2014, ShapeShift has grown an average of 48% per month since its launch, according to the release, so that it now hosts more than 50,000 bitcoins of monthly trading volume—worth about $52 million at the prevailing exchange rate. The volume is recorded in bitcoins because no dollars or other national currencies are allowed on the platform, which is incorporated in Switzerland.
"When we started ShapeShift, a future world of natively digital assets was very theoretical," Erik Voorhees, the exchange's founder and CEO, said in the release. "Yet this world is quickly arriving; one in which millions of forms of digital value, from access keys to tokenized derivative contracts to video game items, will trade between people and machines all over the world, every second of every day. Just as information has gone natively digital, so too now goes value. Bitcoin taught a skeptical world how to do it, and the gold rush is on."
While other leading digital currency exchanges serve merely to connect buyers and sellers, ShapeShift serves as a middleman—buying and selling coins on behalf of its users. It does so without collecting customer data, as traditional money transmitters are required to do, instead warning users that all transactions sent to and from ShapeShift are “public and easily correlated” and that the platform is therefore useless for money laundering.
More than 40 digital currencies and blockchain tokens are currently available on the platform, including bitcoin, ether, the Rep token of prediction market Augur, Dash and Monero.
"ShapeShift's team built a compelling crypto exchange engine which can be easily integrated into third-party products given its unique trustless design," said Christian Nagel, partner at Earlybird.
The exchange has integrated with Jaxx, a so-called multitoken digital wallet created by Anthony Di Iorio, a co-founder of the Ethereum network, that allows users to hold balances in multiple blockchain assets simultaneously. Through the partnership with ShapeShift, Jaxx users can trade these coins and tokens without ever leaving the wallet interface.
Along with Earlybird, several other firms joined in ShapeShift's funding round, including Blockchain Capital and Pantera Capital, which are known for investing in blockchain tech companies.
One draw for investors was Voorhees himself. A bitcoin pioneer who first made a name for himself as the director of marketing for BitInstant, the first digital-currency startup to raise $1 million or more in venture capital, Voorhees has long been one of the most thoughtful of the digital-currency die-hards.
He has also learned the hard way how to avoid the pitfalls that cryptocurrency startups face. The Securities and Exchange Commission slapped Voorhees with a $35,000 fine in 2014 for the sale of unregistered securities related to SatoshiDice, the bitcoin gambling site he once co-owned.
Above any other reason for investing, according to Paul Veradittakit, a partner at Pantera, his firm "invested in ShapeShift because of our confidence in Erik, whom we've known for a while and [who] has demonstrated the leadership and qualities to succeed in this space."