The U.S. Securities and Exchange Commission’s former head of internet enforcement says the conviction of ex-FTX CEO Sam Bankman-Fried (SBF) is “just the tip of the iceberg” for the entire crypto industry. “People should not think that it’s safe to go back in the water … It’s a mammoth House of Cards,” he stressed, asserting that crypto, web3, and blockchain are all “nonsense.”
‘This Is Just the Tip of the Iceberg’
Former U.S. Securities and Exchange Commission (SEC) official John Reed Stark discussed his perspective of the crypto industry following the conviction of former FTX CEO Sam Bankman-Fried (SBF) in an interview with CNBC on Friday. The jury delivered a verdict on Thursday after a month-long trial, finding Bankman-Fried guilty of all seven charges.
Stark is currently president of cybersecurity firm John Reed Stark Consulting. He founded and served as chief of the SEC Office of Internet Enforcement for 11 years. He was also an SEC enforcement attorney for 15 years. He said on Friday that the swift conviction of Bankman-Fried is “metaphorical in a sense for all of crypto,” warning:
This is just the tip of the iceberg. People should not think that it’s safe to go back in the water. It’s not safe. It’s a mammoth House of Cards.
“If you look at crypto, web3, blockchain — it’s all nonsense,” he opined. The former SEC official also claimed that crypto, including bitcoin, does not help the unbanked.
“It is part of any Ponzi scheme,” he continued. “If you look at web3, it’s just marketing blather. You look at crypto, it’s mathematical, computational blather. It represents nothing. There’s no cash flow, there’s no earnings, there’s no balance sheet, there’s nothing to it.” The former SEC official further told the news outlet: “Crypto is not innovation … The iPhone, that’s Innovation. The internet, the cloud, AI — those are innovations.”
Stark has repeatedly warned about the potential collapse of the crypto industry. In June, he advised investors to get out of crypto platforms now. “I can’t say it any plainer. I believe that we now know for certain that crypto trading platforms are under a U.S. regulatory/law enforcement siege which has only just begun,” he cautioned. He also warned that a crypto regulatory onslaught will never end. In addition, he recently urged the U.S. Department of Justice (DOJ) to take action against crypto firms, suggesting that “crypto-grifters” need to “face the threat of DOJ prosecution (i.e. prison time).”
Nonetheless, the former SEC internet enforcement chief anticipates exponential shifts in crypto regulations after election day. “Should a Republican get elected President, Chair Gensler would likely resign and the senior Republican appointed SEC Commissioner (in this case famed ‘crypto-mom’ Hester Peirce) would possibly become acting chair,” he predicted.
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