Cameron Winklevoss criticized the Securities and Exchange Commission (SEC) on Saturday for a history of failure, noting that it has been a decade since the agency received what he called the first Bitcoin ETF filing and shut it down.
The Winklevoss twins, who co-founded the crypto exchange Gemini, first filed a Bitcoin ETF-like trust in July 2013.
The Winklevoss’ first filing, along with a second attempt in 2018, was ultimately turned down by the SEC. While futures-based Bitcoin ETFs have since been given the green light in the US, the SEC claims that no spot ETF scheme proposed to date does enough to protect investors from “fraudulent and manipulative acts and practices.”
So, on the 10th anniversary of the first filing, Winklevoss called out the agency for supposedly dragging its feet, acknowledging that any other filing for a spot-based Bitcoin ETF was also suppressed.
“The SEC’s refusal to approve these products for a decade has been an unmitigated disaster for American investors,” he said, adding that the agency’s reluctance “shows how the SEC is a failed regulator.”
These failures, according to Winklevoss, include cutting investors off from the best investment opportunity of the past decade. Or, as Winklevoss puts it, keeping investors “protected” from Bitcoin exposure.
As the crypto market flinched after the SEC’s bombshell lawsuits against Binance and Coinbase on June 5, BlackRock’s gamble to establish a Bitcoin ETF on the spot two weeks later rekindled the optimism on Crypto Twitter and pushed Bitcoin higher. Capping off a flurry of Bitcoin ETF applications from other companies that followed, including Invesco, Wisdom Tree, and Valkyrie-Fidelity threw his hat back in the ring last week.
However, the SEC believes that BlackRock and Fidelity’s recent Bitcoin ETF filings “are not sufficiently clear and comprehensive,” according to a report of the Wall Street Journal.
Winklevoss claims that the complete lack of options for spot Bitcoin ETFs has “pushed” U.S. investors to Grayscale’s Bitcoin Trust. Shares in Grayscale’s Bitcoin trust, launched in 2013, are currently trading at a discount to its Bitcoin holding due to the inability of shareholders to buy back their shares.
Although Winklevoss called the product “toxic,” he didn’t mention that turning Grayscale’s Bitcoin Trust into an ETF would probably solve this discount, and the company is currently to sue the SEC on repeated denials of doing just that.
Winklevoss has joined a chorus of critics who say SEC Chairman is Gary Gensler pushing innovation offshoreand said the agency meanwhile pushed “investors into the arms of FTX” and made them victims “of one of the greatest 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 conduct on the collapsed exchange, including fraud.
Sending investors overseas in search of Bitcoin exposure has also led them to do business with “unlicensed and unregulated venues,” Winklevoss claimed.
Gemini and the SEC are not on friendly terms. The regulatory body accused Gemini of violating securities laws in January, claiming that its “Gemini Earn” product constitutes an unregistered securities offering. Private investors used to be able to lend their crypto to the now bankrupt company Genesis, which they did charged by the SEC – in exchange for interest on deposits.
Notably, Genesis and Grayscale are both owned by Digital Currency Group. And Genesis and Gemini are involved in a feud over one loan of $900 million which Gemini expanded into the cryptocurrency lender.
Winklevoss considered a lawsuit against DCG and company executive Barry Silbert earlier this year, but Gemini, Genesis and DCG reaches an agreement “in principle” in February. However, Gemini said DCG missed a $630 million loan payment last month and is at risk of defaulting on its obligations.
Winklevoss expressed hope that the SEC “will reflect on its dismal record” and focus on its stated duties, “rather than overstepping its legal power and trying to act as the gatekeeper of economic life.” “
In addition, Winklevoss ended his post with accolades for “all those who fight for the good to bring US spot Bitcoin ETFs to life,” which in practice may exclude certain companies with pending applications or lawsuits.