Cameron Winklevoss slammed the Securities and Exchange Commission (SEC) for a history of failure on Saturday, noting that it’s been ten years since the agency received what he called the first Bitcoin ETF application — and killed it.
The Winklevoss twins, who co-founded the crypto exchange Gemini, first filed a Bitcoin ETF-like trust in July 2013, moving early to establish an investment vehicle that tracks the price of Bitcoin and trades from the same way as stocks on exchanges like the Nasdaq.
The Winklevoss’ initial deposit, as well as a second attempt in 2018, was eventually rejected by the SEC. While Bitcoin futures-based ETFs have since received the regulatory green light in the United States, the SEC says that no spot ETF arrangement proposed so far is sufficient to protect investors against “the acts and fraudulent and manipulative practices”.
So, on the 10th anniversary of the first filing, Winklevoss called out the agency for supposedly dragging its feet, acknowledging that all other applications for a spot-based Bitcoin ETF were also snuffed out.
“The SEC’s refusal to approve these products for a decade has been a complete and utter disaster for U.S. investors,” he said, adding that the agency’s reluctance “demonstrates how deeply the SEC is a faulty regulator.
Those failures, according to Winklevoss, include depriving investors of the best investment opportunity of the past decade. Or, as Winklevoss puts it, keeping investors “protected” from Bitcoin exposure.
As the crypto market retreated after the SEC bomb lawsuits against Binance and Coinbase on June 5, BlackRock’s bet to establish a spot Bitcoin ETF two weeks later rekindled optimism on Crypto Twitter and pushed Bitcoin upper. Capping a wave of Bitcoin ETF apps from other companies that followed, including Invesco, Wisdom Tree and Valkyrie, Fidelity threw away his hat back in the ring last week.
However, the SEC believes that recent Bitcoin ETF applications from BlackRock and Fidelity “are not sufficiently clear and complete”, according to a report of the wall street journal.
Winklevoss says the complete lack of options for spot Bitcoin ETFs has “pushed” US investors to Grayscale’s Bitcoin Trust. Shares of Grayscale’s Bitcoin Trust, launched in 2013, are currently trading at a discount to its Bitcoin holdings due to shareholders’ inability to redeem their shares.
Although Winklevoss called the product “toxic”, he did not mention that converting Grayscale’s Bitcoin Trust into an ETF probably solve this discount, and the company is currently pursue the SEC over repeated refusals to do just that.
Winklevoss has joined a chorus of critics who say SEC Chairman Gary Gensler is push innovation abroadand said the agency had meanwhile pushed “investors into the arms of FTX” and victimized them “in one of the biggest financial frauds in modern history.”
Sam Bankman-Fried, the former CEO and founder of FTX, has pleaded not guilty to a litany of charges he faces for his conduct at the collapsed exchange, including fraud.
Sending investors overseas seeking exposure to bitcoin has also led them to do business with “unlicensed and unregulated venues,” Winklevoss said.
Gemini and the SEC are not on good terms. The regulatory agency accused Gemini of violating securities laws in January, alleging that its “Gemini Earn” product constitutes an unregistered securities offering. Retail investors could previously lend their crypto to the now-bankrupt Genesis Company, which was also accused by the SEC, in exchange for interest on the deposits.
Notably, Genesis and Grayscale are both owned by Digital Currency Group. And Genesis and Gemini had a fight about a $900 million loan which Gemini has extended to the crypto lender.
Winklevos considered a lawsuit against DCG and company CEO Barry Silbert earlier this year, but Gemini, Genesis and DCG hit an agreement “in principle” in February. However, Gemini said DCG missed repayment of a $630 million loan last month and is at risk of defaulting.
Winklevoss expressed hope that the SEC will “reflect on its dismal record” and focus on its stated duties, “instead of overstepping its statutory authority and trying to act as the guardian of economic life.”
Additionally, Winklevoss ended his post with praise for “everyone fighting to bring U.S. spot Bitcoin ETFs to life” — which, in practice, may exclude some companies that have pending claims or lawsuits.