In recent weeks, the cryptocurrency sector has been anticipating a decision from the U.S. Securities and Exchange Commission (SEC) regarding a spot Bitcoin Exchange Traded Fund (ETF). However, John Reed Stark, a former SEC insider who served as an attorney at the regulatory agency, has cast doubt on the possibility of such an approval.
In an assessment posted on his X account on August 18, Stark asserted that the chances of approval are ‘slim and none,’ citing emerging evidence alleging that the crypto market is rigged.
His assessment comes in response to a recent study by the Network Contagion Research Institute and a CNBC report, which highlighted the extensive methods used to manipulate the market, lack of ethics, and regulatory uncertainty.
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“The Chances for SEC Approval of a Bitcoin Spot ETF Are Slim and None (And Slim Just Left Town). <…> The cryptoverse is a cesspool of grift, fraud, and chicanery,” he said.
Stark’s statement emphasized the chaotic and anarchical nature of the crypto marketplace, terming it as a “Walking Dead-Like, Anarchical Financial Marketplace.”
Lack of oversight
The former SEC attorney raised the alarm on the absence of regulatory oversight, consumer protections, and financial safeguards in the crypto industry. He lamented the absence of fundamentals, balance sheets, and traditional indicators that investors typically rely on for making informed decisions in more established markets.
The report from CNBC detailed the widespread influence of bots in boosting cryptocurrency prices, specifically those associated with FTX-listed crypto assets. This manipulation has prompted concerns over the authenticity of market movements and the potential for unsuspecting investors to fall victim to orchestrated schemes.
Stark’s candid critique extended to the ethical implications of the cryptocurrency boom. He accused the crypto sphere of not only rewarding fraud but also actively teaching it.
The plight of victims
He also expressed concern over how victims of manipulation have inadvertently become participants in schemes, often unknowingly promoting fraudulent activities through social media.
“Even worse, the cryptoverse has transformed victims into victimizers, drafting and enlisting the mammoth social media horde to serve as unwitting soldiers of fortune (without even having the decency to pay their legions any compensation or military scrip),” he added.
As the cryptocurrency market continues to undergo evolution, Stark’s insights emphasize the pressing requirement for regulatory clarity and investor protection within the sector. His cautionary stance against the “Greater Fool Theory” adherents focused on rampant speculation and regulatory gaps that can result in financial crises and substantial losses for investors.
It is important to highlight that the SEC recently deferred its decision on the spot Bitcoin ETF once again. Such an approval has been regarded as a potential catalyst for a market upswing.
Indeed, analysts maintain that news of the approval could aid the market in recovering from the recent pronounced sell-off.
