SEC Veteran Calls Crypto “Mammoth Ponzi Scheme”

John Reed Stark, a former Chief of the SEC Office of Internet Enforcement has tagged crypto to be a “mammoth Ponzi scheme” about a Coinbase ad currently circulating on the internet. 

Coinbase Ads Draws Ponzi Scheme Comparison

Software engineer Stephen Diehl recently reacted to a new Coinbase ad on the X app that preaches updating “the system.” Despite the accolades the social media promotion got, Diehl received it with mixed feelings. The software engineer pointed out that the ad was rather a form of “gaslighting.”

For context, Diehl emphasized the fact that the American cryptocurrency exchange is involved in the sales of some gambling products that prey on the financial illiteracy of its users. 

These products are usually disguised in “phony financial populism” which could well be categorized as a crypto Ponzi scheme, per a statement from Diehl. Considering this situation, Diehl perceives the Coinbase ad as the exchange promoting a crypto Ponzi scheme as a way to a better financial system. 

“It’s completely absurd, twisted, and I dare say outright evil, to claim Ponzi schemes and gambling are building a “better financial system”,” the software developer wrote on the X app.

Stark, known for his criticisms of crypto entities, shared the same sentiment with Diehl as it concerns the Coinbase ad. He called the advertisement “disturbing, unscrupulous, and shameless.” 

The ex-SEC official went on to highlight the negative effect that such financial panacea cry-outs have had on the crypto ecosystem. The collapse of top crypto projects like Terra, Voyager Digital, FTX, Celsius Network, and BlockFi was referenced in the post.

Crypto Ad Regulation: a Global Affair

In the case of FTX, many celebrities and top brands were dragged into a lawsuit for promoting the exchange as well as other shady crypto projects recently, underscoring the sensitivity in crypto promotions. 

In like manner, popular TV personality Kim Kardashian was charged by the United States SEC for promoting EthereumMax and she had to pay a fine of about $1.2 million. 

Discussions around crypto Ponzi schemes and other risks associated with crypto investments have made regulators all over the world more conscious. 

So far, many regulators have been putting measures in place to regulate crypto advertising. Spain’s CNMV decided to enforce its crypto asset advertising regulation last month. The Financial Conduct Authority (FCA) in the UK has also implemented its crypto ads compliance guidelines.