Coin An and the Possibility of a Devastating Investor Massacre
According to the news on March 7, in response to the questions from three US senators, John Reed Stark, a former Internet enforcement officer of the United Sta…
According to the news on March 7, in response to the questions from three US senators, John Reed Stark, a former Internet enforcement officer of the United States Securities and Exchange Commission, wrote on Twitter: “My view is that Coin An is a shadow bank. While providing limit order/brokerage/custody/clearing/settlement/other services, it mints its own counterfeit currency without the supervision or audit of the United States. This is the recurrence of FTX, and a large-scale bank run seems inevitable. Once the withdrawal is suspended, Coin An begins to collapse. Not only will Coin An’s customers be cut off, but also customers may become unsecured creditors. See FTX, Celsius, Block Fi, Voyager, a devastating investor massacre. “
Former official of the US SEC: Coin An is a shadow bank, and large-scale bank runs seem inevitable
Interpretation of the news:
The recent statement of John Reed Stark, a former Internet enforcement officer of the United States Securities and Exchange Commission, about Coin An, a new cryptocurrency platform, has caused quite a stir among investors and experts. According to Stark, Coin An is a shadow bank that is minting its own counterfeit currency without the supervision or audit of the United States. This, he says, creates the potential for a large-scale bank run, similar to what happened with FTX, Celsius, Block Fi, and Voyager.
What makes Coin An different from other cryptocurrency platforms is that it provides limit order/brokerage/custody/clearing/settlement/other services, in addition to issuing its own currency. As a result, it operates like a traditional bank, but without the same level of government oversight and regulation. This creates significant risk for investors, who may become unsecured creditors if the platform fails, as they will not have the same legal protections as customers of regulated banks.
Stark’s warning about Coin An is based on his experience with other similar platforms that have failed in recent years. FTX, Celsius, Block Fi, and Voyager all experienced bank runs, with customers scrambling to withdraw their assets as the platforms faltered. In some cases, customers lost significant amounts of money, leading to what Stark calls a “devastating investor massacre”. Stark’s prediction of a bank run and the collapse of Coin An, therefore, should not be taken lightly.
In conclusion, while cryptocurrencies have the potential to revolutionize the financial sector, platforms like Coin An that operate outside the traditional regulatory framework need to be approached with caution. Stark’s warning about the potential for a bank run and investor losses should serve as a wake-up call to both investors and regulators. The rise of shadow banks in the cryptocurrency world is a new phenomenon that regulators will need to monitor closely to prevent a repeat of recent failures.
Keywords:
Shadow Bank, Counterfeit Currency, Bank Run.
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