In a detailed social media post on January 7th, former SEC Office of Internet Enforcement chief, Stark, presented a pessimistic outlook on Bitcoin (BTC) and cryptocurrencies at large, asserting that their primary utility lies in criminal activities.
Spot Bitcoin ETFs Face Criticism from Former SEC Official and Cybersecurity Expert
Stark painted a grim picture, stating, ‘To me, the stark reality is that the approval of a Bitcoin Spot ETF is sadly, tragically and catastrophically… another fee-suck… Ponzi scheme… masquerade.’
Having led the SEC’s Office of Internet Enforcement, Stark believes that cryptocurrencies facilitate various devastating crimes and terrorism, primarily benefiting ‘grifters’ and ‘criminals’ who exploit the pseudonymous nature of cryptocurrencies for global criminal activities.
His comments coincide with reports suggesting that the SEC might approve a Bitcoin spot ETF as early as January 10th.
In Stark’s view, the approval of a Bitcoin spot ETF is just another ‘fee-sucking’ maneuver, portraying it as an opportunistic move by billionaire financial magnates.
According to Stark, Bitcoin ETFs are vehicles designed to provide more opportunities for investors to face financial ruin while enriching the already wealthy.
He criticized the crypto ecosystem, labeling it as a toxic mix of computational jargon, affinity fraud, and the ‘Greater Fool Theory.’ Stark argued that Bitcoin spot ETF applicants are exploiting the concept of ‘financial inclusion’ in cryptocurrencies to conceal what he sees as a monstrous Ponzi scheme.
Stark concluded with a warning, expressing concern that the potential approval of a Bitcoin spot ETF by the SEC would expose millions of American investors to the inherent risks of investing in digital assets. He urged the SEC not to facilitate financial damage by endorsing what he described as a ‘socially worthless gambling chip.
Stark sentiment
Stark’s critical assessment of the crypto industry comes shortly after a similar stance was taken by Better Markets, a non-profit organization advocating for stricter financial regulations.
On January 5th, Better Markets CEO Dennis M. Kelleher submitted an official letter to the SEC, urging the regulator to reject the ongoing applications for a Bitcoin ETF. Kelleher expressed concerns about the potential risks to investors, branding the instrument as a ‘volatile and speculative product of no societal value’ that could impact millions of American investors and retirees.
The CEO warned that approving the ETF could set a troublesome precedent, making it challenging for the SEC to prevail in future legal disputes and opening the door for the crypto industry to misguidedly promote cryptocurrency diversification to retirement savers.
Kelleher questioned the maturity of the Bitcoin market for such an ETF, highlighting issues like potential wash trading and uneven Bitcoin ownership distribution. He argued that the high risk of fraud in the Bitcoin market contradicts an exchange’s responsibility to prevent fraud and manipulation, and to protect investors and the public interest.
Kelleher also contended that the inherent volatility of Bitcoin should disqualify it automatically, stating that the unpredictable price fluctuations pose risks inconsistent with the obligation to safeguard investors and public interest.
While Kelleher’s views faced criticism from some in the crypto community, including Bloomberg ETF analyst James Seyffart, who argued that rejecting ETF applications at this stage would be a ‘criminal move,’ given the time and effort invested by both the SEC and potential issuers.
Some critics, such as FOX News journalist Eleanor Terrett, pointedly highlighted Kelleher’s extensive track record of expressing anti-crypto sentiments. They also drew attention to his purported close ties with Senator Elizabeth Warren, known for her regular scrutiny of the cryptocurrency industry.
Terrett and others raised concerns about potential biases influencing Kelleher’s stance on Bitcoin ETFs, emphasizing that his history of negative remarks about the crypto space might cloud his judgment. The alleged proximity to Senator Warren, a vocal critic of cryptocurrencies, further fueled suspicions of a predisposition against the industry.
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