It wouldn’t be another week in crypto if there wasn’t a total nut job out there throwing shade at Bitcoin for all the wrong reasons. This week, it’s the turn of John Reed Stark – no, not the former King of the North in Game of Thrones – but a “cybersecurity expert” who worked for 20 years as part of the US Securities Exchange Commission’s (SEC) enforcement division. Stark went on a rant in a Law360 column where he called Bitcoin a “con” and advised investors to steer clear of Bitcoin before they lose their money to “predatory hucksters” – no joke.
IEOs On the SEC Hit List
Stark – who by the way is a former SEC attorney – went on to throw dirt at initial exchange offerings (IEOs), saying that they are a bogus investment scam. According to Stark, the SEC is currently well aware of the current IEO trend and is keeping a close eye on a number of projects using IEOs to raise funds. He added that the SEC is preparing to hunt these projects down. Given the SEC’s recent spate of attacks on ICOs – that it lost – we aren’t too worried about legitimate IEO projects getting the axe. In fact, back in February, the SEC launched a guide to ICOs, hinting that they are acceptable when performed correctly.
Stark rambled on and was at times pulling at straws to back up his argument, he went on to add:
IEOs represent yet another blatant attempt to hijack a similar-sounding acronym — IPO — in an effort to lure investors seeking to get rich quick. However, just like ICOs, the IEO has not a single element in common with the IPO (other than the first and last letters of its acronym).
That doesn’t sound like the argument of someone who has sound reasoning as to why all IEOs are bad. Stark sounds like a toddler who missed out on the early Bitcoin boom, the second Bitcoin boom, and the latest Bitcoin boom and is throwing his toys out the pram in a bid to manipulate the market for a shot at the fourth Bitcoin boom.
Did We Mention He Called Bitcoin a “Magnet for Criminals”?
If you needed any more convincing that Stark is a bitter old man who really has no clue what he is talking about, he went on to blurt out the classic phrase of every uninformed Bitcoin pessimist –
Bitcoin has no utility other than to aid crimes such as money-laundering, terrorism financing, and ransomware extortion schemes. ?
Let’s go through and debunk every single one of Stark’s points.
1. Bitcoin has no utility other than to aid crimes
This is rather nonsensical and doesn’t really need much explaining, but we will just in case Stark is reading and needs a quick introduction to Bitcoin. Bitcoin is a peer-to-peer electronic cash system – as the title of the original whitepaper suggests – and can be used as a means of payment for goods and services from a range of providers. For example, residents of Innisfil can pay their property taxes with Bitcoin or if Stark wants to get his wife a new diamond necklace – she will need something after he missed out on epic crypto trading gains – he can head down to the Birks Group and pick up some new bling then pay with Bitcoin.
Sure, you can use Bitcoin for criminal activities – like buying a gun from the dark web – but the police will be at your door before the gun is…
2. Money Laundering
In all credit to Stark, a lot of criminals have tried to use Bitcoin to launder money, but few have managed to succeed for long. It’s far easier for criminals to launder cash through traditional entities, such as small businesses that act as fronts. The crypto world is currently working on implementing anti-money laundering standards and anyone using crypto for money laundering is found quickly and arrested – like a gang in Spain recently found out.
3. Funding Terrorism
If Stark was referring to Hamas using Bitcoin to skirt round US sanctions, then we’re happy to let this slide as him getting confused. In fact, the RAND Corporation recently conducted a study that revealed cash is still the terrorist’s currency of choice. Bitcoin is too easy to trace thanks to the KYC and AML procedures on off-ramps. Sorry Stark, your beloved cash is still king in terrorism financing.
4. Ransomware Extortion Schemes
Ok, this one we have to give to Stark – a lot of hackers do use Bitcoin as the payment method for their ransomware attacks. That being said, they’re not going to say “please can you send $1,000 to this account number, at this bank, with this name as the reference”. Hackers don’t really have an option here, but the great thing about these hackers using Bitcoin is that the authorities can easily trace the Bitcoin to the final address and catch the bad guys. The DEA has already said that Bitcoin transactions are easy to trace and they want more criminals to use Bitcoin as it makes their job so much easier – so we’re not really sure why Stark is so mad about this.
Cash might still be king in a lot of places – most notably in Stark’s mind – but Bitcoin is certainly making a huge push to become an accepted method of payment. More and more legitimate businesses are accepting cryptos with every passing day, helping to end the years of terror where the current financial institutions have enslaved the public. For once, there is hope to catch kidnappers as they start to use Bitcoin over fiat cash – Bitcoin is making the world a safer place.
If Stark truly believes that Bitcoin and all cryptos are bad, then it just highlights why his career with the SEC is over – he simply cannot adjust to a new world with a new currency.
Good luck with your retirement, Stark!
