Bitcoin

Bitcoin ETF disapproved by the SEC: BitConnect mentioned in the disapproval statement

from Amb Crypto 5 years ago 0 0 718

The United States Securities and Exchange Commission [SEC] has rejected another ETF. The disapproval of the ETF which included the BitConnect is the ETF proposed by the NYSE Arca.

NYSE Arca had proposed for a rule change with the SEC in order to list and trade ProShares Bitcoin ETF and Short Bitcoin ETF. The proposed rule change was filed on 4th December 2017. After which, the Commission prolonged the decision on whether to approve or disapprove the proposed rule change in the month of January 2018.

Following this, the SEC released a statement in the month of July 2018. It stated that they will be postponing the decision yet again as they required more time to come to a conclusion. It is also recorded that the proposed rule change had over 13 comments as of 21st August 2018, a day before they drew upon the decision to disapprove the proposed rule change.

The SEC stated that the rejection ‘does not rest’ on whether Bitcoin or blockchain technology has a value as an investment or innovation. The SEC rejected the proposed rule change because of the following reasons:

In addition to this, the SEC also states that the exchange platform has not provided sufficient proof that then Bitcoin futures market has a significant size. This is also one of the major reasons the Winklevoss ETF was rejected by the SEC.

They said:

“That failure is critical because… the exchange has failed to establish that other means to prevent fraudulent and manipulative acts and practices will be sufficient, therefore surveillance-sharing with a regulated market of significant size related market of significant size related to bitcoin is necessary to satisfy the statutory requirement that the Exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”

Furthermore, out of the 13 comments, most of them have stood against the approval of the proposed rule change. The key points mentioned by the commenters are:

According to the commenter, this nature of the market is the result of natural trading and would eventually lead to price manipulation.

Along with this, the commenter also believes that the offering of long and short ETF would result in the creation of two-sided markets if both the long and short ETPs end up with the same magnitude. The commenter stated that the Bitcoin ETP is not the only factor that would motivate the market makers to maintain the derivatives desks.

Out of the six, one stated that the whole cryptocurrency community is aware of that Bitcoin volatility is the result of manipulation. The commenter said:

“Bitcoin market is result of manipulation thorugh the coordinated use of high-frequency trading across multiple exchnages.”

Another commenter states that the example of a Ponzi scheme in the cryptocurrency market is BitConnect. The exchange platform promised returns of up to 120%. BitConnect is one of the biggest Ponzi schemes which took place in the cryptocurrency market and the exchange platforms token was listed amongst the top 20 coins in the market. The exchange platform shut down its business after accusations scam erupted and they received a notice from the UK government and a cease and desist order from the Texas State Securities Board.

The commenter states:

“The commission should not send the wrong signal to bitcoin manipulators – who, the commenter asserts currently operate with impunity – by approving a bitcoin ETP”