Opinion | Bitcoin ETF will bring market manipulation and fraud risks to more investors

Former U.S. Securities and Exchange Commission (SEC) official John Reed Stark expressed a negative opinion on Bitcoin spot ETFs, stating that cryptocurrencies have no intrinsic value and are only used for crime. He believes that a Bitcoin spot ETF would bring fraud and market manipulation risks to retail investors and should not be approved.

This article is compiled and translated. For any discrepancies, please refer to the original source.

Cryptocurrency ETF Should Not Be Approved

Cryptocurrencies Have No Intrinsic Value

John believes that cryptocurrencies have no intrinsic value, no cash flow, no earnings, no employees, no management, no balance sheet, no products, no services, no operational records, no analytical valuation. Apart from the analysis related to cryptocurrency speculation, there is no other data to refer to.

There are two reasons for the rise in cryptocurrency prices:

• Because there are no regulatory agencies to prevent market manipulation
• Because people can sell cryptocurrencies to even dumber fools

Therefore, cryptocurrencies have been severely overvalued, and everything will collapse until there are no bigger fools to buy in.

Cryptocurrencies Serve No Positive Purpose

Cryptocurrencies have only one practical proven use — for criminal activities, such as terrorism, money laundering, sanctions evasion, ransomware attacks, drug trafficking, child pornography, human trafficking, and espionage.

And now the SEC is actually considering approving a Bitcoin spot ETF?

Issues with Bitcoin Spot ETF Approval

If the Bitcoin spot ETF is approved by the SEC, it will be a disaster for the market, as it will bring:

Another Fee Structure

The institutions currently applying for a Bitcoin spot ETF in the market are just a group of opportunistic financial giants who shamelessly design and manufacture products to earn more fees, allowing more investors to experience bankruptcy and incalculable risks, while lining their own pockets.

VanEck and 11 other companies have resubmitted SEC documents, and if approved, will give ETF profits back to the Bitcoin community Brink.

Another Ponzi Scheme

While the promoters of the Bitcoin spot ETF claim that cryptocurrencies can include clients without bank accounts in the financial ecosystem, the reality is quite the opposite. Cryptocurrencies are not only more expensive, more complex, and riskier than mainstream finance, but also a massive Ponzi scheme.

Another Predatory Inclusion

Cryptocurrencies are just another example of predatory inclusion and affinity fraud.

There are many similarities between cryptocurrencies and other predatory products. They are sold to deceive vulnerable and dissatisfied individuals, offering more unequal financial services to historically excluded groups. While cryptocurrencies may seem to provide opportunities for the marginalized, in reality, these opportunities only worsen their situation. Cryptocurrencies do not address the historical issues of inclusive finance.

On the other hand, the current functions of cryptocurrencies do not correspond to the needs of their target audience, but instead bring many risks and disadvantages, thus undermining the benefits of cryptocurrencies.

Another Vocabulary to Mask Intentions

The concept of a Bitcoin spot ETF is laughable because it is just another Wall Street investment scam and a massive money-grabbing scheme, and it may be the most centralized crypto asset, wasn't Bitcoin created to pursue decentralization?

The Current Bitcoin Rebound is False

The proponents of the Bitcoin spot ETF cite the recent rise in Bitcoin prices as evidence that Bitcoin is a significant investment and that ordinary investors should be able to easily acquire Bitcoin.

However, John believes that this is a carefully planned scheme and identifies four real reasons for Bitcoin's recent price surge:

Bankruptcies of Related Companies Not Settled

Over the past few years, numerous major cryptocurrency bankruptcies, including FTX and Three Arrows Capital, have led to a significant reduction in Bitcoin supply, causing an imbalance in supply and demand and resulting in the rise in Bitcoin value.

However, these supply-demand imbalances are temporary. These locked-up Bitcoins will be liquidated and dumped into the market at some point in the future, which will lower the value of Bitcoin.

Tether Minting

Tether has minted 5 billion USDT out of thin air in the past month as air loans — backed only by the loan itself or by cryptocurrencies as reserve assets, issuing "fake dollars" to some large customers without actual US dollars entering the system.

Crypto institutions including exchanges, hedge funds, etc., can use this method to increase leverage and boost cryptocurrency prices, then use the inflated cryptocurrencies as collateral to borrow more USDT and continue this operation.

Market Manipulation by Whales

About 10,000 people own 30% of Bitcoin, and 100,000 people own 50% of Bitcoin, indicating that the crypto market is very illiquid. People involved do not disclose their trades, lack trading transparency, do not undergo regulatory checks or audits, and market manipulation is prevalent and unsurprising.

Whales can manipulate prices through large buy and sell orders. Such behavior triggers a domino effect in the market, affecting traders' and investors' emotions and reactions. Therefore, whales create the desired market response by driving the token's price and supply, significantly affecting cryptocurrency liquidity and price stability. The methods of controlling the Bitcoin market are numerous.

BlockBeats interviews the controversial market maker DWF Labs: We are not manipulating the market

Anarchy

For traditional financial companies registered with the SEC, the SEC has absolute and immediate control over all aspects of their operations. However, in the Bitcoin market, the SEC lacks this kind of supervision and access, lacks the ability to detect, investigate, and prevent fraud, allowing the Bitcoin market to operate in a regulatory vacuum, preventing the SEC from discovering individual misconduct and enforcing violations.

Please Tell Me Bitcoin ETF is Not Real

The Bitcoin market is full of fraud and manipulation, which means approving these products will expose millions of American investors and retirees to harm that the SEC aims to prevent.

On the other hand, approving the Bitcoin spot ETF will reshape the future of the crypto industry. Operators in the crypto industry can claim or imply that their products are now approved by the U.S. government, and will undoubtedly market heavily to Americans, implying that the SEC's actions have legalized cryptocurrencies, giving retail investors a false sense of security.

SEC approval is a mistake, the investment risks of Bitcoin have been evident and recurring over the past three years, resulting in billions of dollars in losses. Investors in Bitcoin spot will face the same market fraud and manipulation risks as direct Bitcoin holders, and the SEC should not expose investors to these risks.

Chairman Gensler has been steadfast in his commitment to protecting investors, maintaining fair, orderly, and efficient markets, and promoting capital operations since taking office. But now suddenly this former Wall Street banker seems to have found his destiny again and may end his power with a dramatic, tumultuous turn of events.

Gary, please tell me this isn't real...