Former SEC Attorney John Reed Stark has made his reservations about cryptocurrencies known. The lawyer also suggested why the prices of these crypto tokens will come crashing down soon enough.
Why Crypto Will Come “Crashing Down”
In a post shared on his X (formerly Twitter) platform, Stark suggested that crypto prices will come “crashing down” because these crypto tokens do not have “inherent value.” He opined that cryptocurrencies derived their value from hype as “people are able to sell hyped, FOMO’d and overpriced crypto to a “greater fool.”
As to when the crypto prices will crash, the former SEC enforcement attorney stated that this will happen when there are “no greater fools left.” The lawyer didn’t hold back in his criticism of cryptocurrencies as he also shared a WSJ (Wall Street Journal) article that said crypto’s two main use cases were fraud and crime.
In his criticism of crypto, Stark’s major concern seems to be his false belief that crypto doesn’t have a structure. He stated that crypto tokens do not have employees, management, balance sheets, products, cash flow, or services. He also mentioned that crypto tokens do not have a “proven track record of adoption or reliance” as everything is merely speculation.
Stark didn’t stop there as he went on to say that crypto “has failed miserably,” including its mission to solve the problem of financial inclusion and evolve into a true store of value. Instead, he believes that these cryptocurrencies are now manipulated to “keep the celebration going.” He had earlier mentioned how trying to explain Bitcoin’s price is like trying to explain the clothing worn by Poltergeists.
The former SEC attorney, however, seems to be misguided in his criticism of cryptocurrencies as a whole. For instance, one could instantly point to Ripple, which has shown the potential use cases of cryptocurrencies like XRP with its Ripple Payments. Meanwhile, locals in countries with high inflationary pressures are readily adopting Bitcoin and other crypto tokens as a store of value.
Total market cap returns above $1.5 trillion | Source: Crypto Total Market Cap on Tradingview.com
Stark’s Opinion On A Spot BTC ETF Approval
The former SEC attorney labeled the reported 90% likelihood of the SEC’s approval of a Bitcoin spot ETF as “absolutely absurd.” Bloomberg analysts had earlier mentioned that there is a 90% chance that the SEC will approve a Spot Bitcoin ETF by January 10, 2024. Reacting to this, Stark stated the “so-called analyst reports” sound more like “old-time bookie tipster sheets.”
He went on to further suggest that there was still the possibility of the SEC denying the pending Spot Bitcoin ETF applications. He noted that it was difficult to predict the SEC’s actions behind closed doors but went on to give two possible scenarios as to how a denial could play out.
The first is that the SEC could simply be meeting with filers in “a CYA effort” so that they can turn around and say that they tried to give them a chance to comply, but they didn’t meet the requirements. The second scenario is that the SEC could allude to the pending crypto-related investigations as the reason for its denial, as approving these funds will pose “a serious threat to investors.”
