Former SEC official, cybersecurity expert weighs in on ‘disastrous’ spot Bitcoin ETF

Former U.S. Securities and Exchange Commission (SEC) investigator John Reed Stark has slammed pending approval of a spot Bitcoin exchange-traded fund (ETF), vehemently arguing against the cryptocurrency’s intrinsic value.

On January 7, Stark published a lengthy post on social media painting a grim future for Bitcoin (BTC) and cryptocurrencies, suggesting that their only proven use was in criminal activities.

“The harsh reality to me is that the approval of a Bitcoin spot ETF is pathetic, tragic and disastrous…another fee-sucking…Ponzi scheme…in disguise,” Stack said.

See the full statement below.

Stark served as director of the SEC’s Office of Internet Enforcement. In his view, cryptocurrencies have fueled a series of devastating crimes and terrorism. He believes that the main beneficiaries are mainly “scammers” and “criminals” who take advantage of the pseudonymous nature of cryptocurrencies to carry out a large number of criminal activities around the world.

Stark’s remarks come amid reports that the SEC may approve the issuance and launch of a Bitcoin spot ETF as early as January 10.

In his view, the approval of the Bitcoin spot ETF is another “fee-absorbing” behavior and an opportunistic move by a billionaire financial giant.

Stark said that Bitcoin ETFs are a means of creating more opportunities for investors to experience financial ruin while enriching the pockets of the wealthy.

Stark criticized the cryptocurrency ecosystem, describing it as a toxic mix of computational mumbo-jumbo, affinity fraud and the “big fool theory.” He further pointed out that Bitcoin spot ETF applicants are using the so-called “financial inclusion” of cryptocurrencies to cover up horrific Ponzi schemes.

Stark concluded by warning that the agency’s possible approval of a Bitcoin spot ETF would expose millions of U.S. investors to the risks inherent in investing in digital assets.

He further called on the SEC not to contribute to the economic losses caused by the widespread dissemination of financial products, which he described as “gambling chips that have no value to society.”

severe mood

Stark’s scathing attack on cryptocurrencies comes on the heels of a similar submission from Better Markets, a nonprofit that advocates for stricter financial regulation.

On January 5, Better Markets CEO Dennis M. Kelleher spoke to the SEC in an official statement letterimploring regulators to reject an ongoing Bitcoin ETF application.

Kelleher warned that approving the financial instrument could pose significant risks to investors, describing it as a “volatile and speculative product with no social value” that could impact millions of U.S. investors and retirees. .

The CEO further warned that this could set a worrying precedent, making it more difficult for the SEC to prevail in future legal battles and creating a new challenge for the cryptocurrency industry aimed at encouraging a range of retirement savers. Paving the way for misleading promotions of diversified investments. Cryptocurrency.

Kelleher questioned whether the Bitcoin market is mature enough for such an ETF, highlighting the potential for wash trades and issues such as the uneven distribution of Bitcoin ownership.

Kelleher said the risk of fraud in the Bitcoin market is so high that listing and trading a Bitcoin ETF on exchanges would be contrary to their responsibilities to prevent fraud and manipulation and protect investors and the public interest.

He also believes that Bitcoin’s inherent volatility should automatically disqualify it from being offered to investors, noting that the risks posed by unpredictable price fluctuations are inconsistent with obligations to protect investors and the public interest.

Kelleher’s emotions are across the board critical Some in the cryptocurrency community, notably Bloomberg ETF analyst James Seyffart, believe that rejecting an ETF application at this time would be a “criminal act” given the time and effort the SEC and potential issuers spend on these applications.

Others, including Fox News reporter Eleanor Terrett, have criticized Kelleher for his long history of anti-crypto rhetoric and alleged close relationship with Senator Elizabeth Warren, who has frequently scrutinized the crypto industry.