John Reed Stark, a former SEC attorney, has criticised cryptocurrency on Twitter as a bad investment.
Stark explained why, in a series of tweets, he thinks cryptocurrencies are failing as safe havens, repositories of wealth, investments, and currencies for the unbanked.
He pointed to a number of important elements that contributed to these failures, including a lack of regulatory monitoring, transparency, and consumer safeguards. Stark, a frequent critic of the SEC who has no financial interest in the cryptocurrency industry, has called attention to the prevalence of market manipulation, insider trading, and fraud in the cryptocurrency industry.
According to Stark, the instability, hefty fees, onerous taxes, and limitless hazards of cryptocurrencies make them unsuitable as a medium of exchange. He refuted the idea that cryptocurrencies are a store of wealth as well, claiming that they are useless and have no inherent worth.
Regarding the assertion that cryptocurrencies can provide unbanked people with a financial solution, Stark described it as an instance of “predatory inclusion” and affinity fraud that preys on the weak and disenfranchised.
In his tweets, Stark also made note of the lack of governmental control and safeguards in the event that cryptocurrency platforms collapse, leaving clients with little options. He compared it to conventional financial services, which include built-in investor safeguards and monitoring.
It should be emphasised that the crypto community responded negatively to Stark’s criticism. BlockTower Capital’s CIO Ari Paul said that if regulators offered supervision as opposed to impediment, the cryptocurrency business may not be as difficult. Paul said that this error may have prevented losses to ordinary investors of at least $10 billion in only the previous year.
Stark said that the SEC is starting to act and that crypto-trading platforms should be registered, but he pointed out that the agency can only bring civil penalties, which may not always be a sufficient deterrent.
