Bitcoin 'Crypto-Casino' is a Terrorist Playground: Ex-SEC Crime Czar

By CCN: Bitcoin is a worthless sham that's only useful for facilitating crime, and the public must be warned about the full spectrum of the crypto-sphere's sleaziness. That's the opinion of attorney John Reed Stark, a cybersecurity expert who worked for 20 years at the SEC's enforcement division.

In a damning Law 360 column, Stark says the Securities and Exchange Commission will soon crack down on initial exchange offerings (IEO), which he called an "unregulated crypto-casino fundraising mutation."

Moreover, Stark underscored that bitcoin is a con, and he advised investors to steer clear of it before they lose their money to predatory hucksters.

Stark: SEC Plans Regulatory Sweep of IEOs

Ex-SEC enforcement czar John Reed Stark said the SEC will hunt down startups who raise funds through IEOs, which he calls "crypto-casinos." | Source: Shutterstock

Basically, Stark says IEOs are just another bogus investment scam being promoted by crypto shills to take advantage of unsuspecting suckers. However, he says the SEC is aware of the recent uptick in IEO transactions and will hunt them down.

"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)."

Stark says unlike IPOs — which are regulated — ICOs and IEOs are virtually unregulated. Accordingly, he says they are an enticing medium for fraud, manipulation, insider trading, hacking, and "a broad range of chicanery."

Former SEC attorney John Reed Stark says bitcoin has spawned a global cadre of dangerous criminals. | Source: Duke University

Stark: Bitcoin Is a Magnet for Criminals

Moreover, Stark says bitcoin has no utility other than to aid crimes such as money-laundering, terrorism financing, ransomware extortion schemes, and tax evasion.

"Much of bitcoin’s value, outside of mere speculation, is derived solely from its ability to facilitate criminal activity. Need a fake I.D., bottle of opiates, a cache of credit card numbers, or a thousand Social Security numbers?"

"Need a way to collect a ransomware payment? Need to fund terrorist-related activities? Need to hire a hitman? Cryptocurrencies like bitcoin have become the payment of choice for these, and a slew of other, criminal enterprises."

Stark argues that because there is so little oversight of the crypto industry, the marketplace has spawned "a growing global cadre of dangerous criminals."

Therefore, he warned that retailers that accept cryptocurrencies risk their reputations and put themselves in legal, regulatory, financial, and ethical jeopardy.

Ransomware Extortionists Demand BTC

During his 20-year SEC career, Stark was the chief of the agency's Office of Internet Enforcement for 11 years. He now runs an eponymous data-breach response firm.

In his experience, Stark says ransomware’s dirty little secret is that most corporations pay the ransom. And lately, the extortionists usually demand payment in crypto.

"How do most corporate victims of ransomware attacks pay the ransoms demanded? Bitcoin of course – it’s fast, reliable, verifiable, subject to little regulation, and virtually untraceable. Bitcoin is ideal for ransomware extortion schemes."

John Reed Stark says ransomware’s dirty little secret is that most corporations pay the ransom. And lately, the extortionists usually demand payment in crypto. | Source: Law360

Bitcoin Used for Election-Tampering

Stark also noted that bitcoin was recently used for election-tampering. In July 2018, special counsel Robert Mueller indicted 12 Russian intelligence officials for attempting to influence the 2016 U.S. presidential election.

According to the indictment, the conspirators used bitcoin to purchase servers and to register domains for their election-meddling.

In addition, the indictment noted that the conspirators used bitcoin to "avoid direct relationships with traditional financial institutions, allowing them to evade greater scrutiny of their identities and sources of funds.”

Craig Wright: Bitcoin Price Will Tank to Zero

John Reed Stark's blistering salvo echoes the sentiments of cryptocurrency entrepreneur Craig Wright, the self-proclaimed inventor of bitcoin.

As CCN reported, Wright warned BTC super-fans that Bitcoin Satoshi Vision (BSV) is the real bitcoin that will supplant all other cryptocurrencies.

But before then, he claims the BTC price will crash to zero because it's worthless and is only useful for money-laundering and other crimes.

"People are going to wake up one day and not find that the value of their BTC investment is diminishing, but that it is zero. One moment you will be looking at US$8,000 per coin, the next, global trading will be suspended."

"The true market of BTC is zero. When it’s stopped, it will just end. As soon as a system of such kind starts to move outside of the legal constructions that allow it to operate, it stands on a foundation of watered sand and will eventually collapse. When it collapses, it can never be recovered."

https://twitter.com/CCNMarkets/status/1134605711504285697

This article was edited by Josiah Wilmoth.

Last modified (UTC): June 23, 2019 12:47 PM

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Samantha Chang @Samantha_Chang

Samantha Chang is a New York City-based financial editor who writes about crypto and business at . She is a law school grad and an alum of the University of Pennsylvania. You can reach her on Twitter at or email her at schang121@juno.com.

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