SEC’s Pushing of Investors into ‘Toxic’ Crypto Products and FTX: Winklevoss Speaks Out

For a whole decade, the securities honchos in the United States have been shoving investors into what can only be described as “toxic” and “unregulated” crypto products, according to Cameron Winklevoss, co-founder of Gemini.

On July 2, the Winklevoss twin didn’t hold back in lambasting the U.S. Securities and Exchange Commission (SEC) for relentlessly denying the existence of a spot Bitcoin exchange-traded fund (EFT). It’s been a staggering ten years since the twins initially sought approval from the regulator for their very own ETF.

“The SEC’s flat-out refusal to greenlight these products for an entire decade has been nothing short of a catastrophic failure, leaving U.S. investors in the lurch and revealing the agency’s incompetence,” Winklevoss voiced with frustration.

He further argued that the absence of an approved spot Bitcoin ETF has forced American investors down the treacherous path of resorting to “toxic products” such as the Grayscale Bitcoin Trust (GBTC). Not only does GBTC trade at an enormous discount compared to the actual Bitcoin price, but it also imposes exorbitant fees that can only be described as astronomical.

Currently, GBTC’s net asset value discount stands at a staggering 30% when compared to Bitcoin’s price, as confirmed by YCharts. On top of that, the annual fee associated with GBTC is a whopping 2%, in stark contrast to the average of 0.40% indicated by the latest July 2022 study from financial services firm Morningstar.

Winklevoss strongly believes that this persistent refusal has driven U.S. investors towards the realm of “unlicensed and unregulated” offshore platforms, with FTX being a prime example. In his own words, FTX is nothing short of “one of the largest financial frauds in modern history.”

“Perhaps the SEC should take a moment to reflect on its abysmal track record. Instead of overstepping its statutory authority and assuming the role of an economic gatekeeper, it ought to prioritize fulfilling its mandate of protecting investors,” he offered as a suggestion.

Amidst this turmoil, Winklevoss’ remarks arrive alongside a flurry of companies that have recently filed, renewed, or amended their applications for a spot Bitcoin ETF. Prominent names such as BlackRock, Fidelity, WisdomTree, Invesco, Valkryie, and ARK Invest are all part of this movement.

According to reports, the SEC has cited inadequacies and a lack of clarity in some of the filings for spot ETFs, thereby requesting the fund managers to resubmit their applications after addressing these concerns.

Meanwhile, Gemini finds itself embroiled in an extended court mediation with Genesis, a subsidiary of Digital Currency Group (DCG), the parent company of Grayscale—the entity responsible for managing GBTC. In addition to that, the exchange is currently dealing with legal charges brought forth by the SEC.

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