Since Bitcoin (BTC) garnered some semblance of traction on the global stage of finance, a majority of the conservative incumbents of legacy markets have been hesitant to laud the cryptocurrency. They (want to) believe that the digital asset is only used for criminal acts, like the laundering of money, as a medium of exchange for contraband goods, and so on and so forth. Even those that have cast aside this narrative have stuck to the speculation script, which cynics harness to bash investors over the head.
And while Wall Street talks a big game about staying compliant with the national and supranational financial legislature, the numbers reveal that institutions could be just as complicit in crimes as felons. Bitcoin creator(s) Satoshi Nakamoto themselves seemingly acknowledged this, embedding a headline regarding 2008’s Great Recession into the coinbase of the first block.
But are cryptocurrency diehards’ sardonic quips towards pompous bankers relevant? Do they even have credence?
Fines On Buffett-Approved Wells Fargo Spark Bitcoin Hype
Barry Silbert, the former head of SecondMarket (now part of Nasdaq) and the current CEO of Digital Currency Group, claims that yes, these comments are relevant. In a recent tweet, the head of the New York-based cryptocurrency conglomerate (owns CoinDesk, Grayscale Investments, Genesis — invests in anything under the crypto sun), explained that Wells Fargo is far from the God-given angel that some Wall Streeters paint it out to be.
Silbert notes that since 2000, the San Francisco-headquartered bank, which Warren Buffett (a Bitcoin skeptic who called BTC a “delusion for charlatans” last week) has invested in, has been fined billions since 2000. In fact, the industry bigwig remarked that the company has been slammed by $14.8 billion in fines in the past 19 years, which were incurred due to over 93 counts of fraud and “other abuses.”
Wells Fargo, a Buffett investment, has been fined 93 times for fraud and other abuses, for a total of $14.8 billion in fines since just 2000
I’ll take bitcoin’s “charlatans” over that any day https://t.co/9OZkzxgQ7x
— Barry Silbert (@barrysilbert) March 9, 2019
In multiple cases, the bank allowed the creation of millions of fake accounts, just to meet the quotas imposed by the who’s who in the institution. These cases of fraud weren’t without their victims, Bitcoinist reports that over 20,000 had their cars repossessed due to Wells Fargo’s’ devious actions. And while seems already bad enough, the company probably made more than it was fined, especially considering that executives and employees did questionable things time and time again.
Anthony “Pomp” Pompliano put the figure Wells Fargo was fined into some much-needed perspective, as anything above $1 billion is a figure incomprehensible to you or I. The Morgan Creek Digital founder explained that the American firm paid 20% of Bitcoin’s market cap in fines “in the last 19 years for their fraudulent activity.”
Funnily enough, Wells Fargo is the very bank that Kevin Pham, a banker turned anti-establishment proponent, began to lambast on mainstream media years ago. After his campaign, fittingly titled “Hold Wells Fargo Accountable”, Pham began to tout the merits of Bitcoin, and most recently, the Satoshi’s Vision chain.
Though, this is just the tip of the iceberg. Alec Ziupsnys, a leading industry researcher, reminds readers of Silbert’s tweet that Wells Fargo is just one cog in the chugging machine that is American finance. He notes that Bank of America was fined $58.4 billion over the past two decades, JP Morgan fined $29.7 billion, and so on and so forth.
Opinion: The Double Standard
Interestingly, this has been somewhat of a double standard in this space as of late. While some have made it clear that institutions are the devil, so to speak, optimists claim that such organizations will revive the cryptocurrency space at large.
When questioned about this, most note that the intake of institutional players is only an end to a means, rather than a trojan horse, if you will. Will this turn out to be the case though? Can a decentralized economy be established with Big Brother watching over our shoulder?
Yes and no. I believe that to reach mainstream disintermediation, in both data and finance, some form of extensive institutional involvement will need to occur. But, there is likely an extremely fine line between too few and too many traditional market players, meaning that cryptocurrency entrepreneurs and investors will need to tread lightly in the years to come.
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