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- SEC Bans ICOs, Loan Schemes, Contracts for Future Tokens
- Dinner meetings between Bankman-Fried and government officials “poor judgment”
John Stark, former head of the SEC’s Office of Internet Enforcement and president of John Reed Stark Consulting, joined CNBC’s ‘Squawk Box.’ to discuss The collapse of crypto exchange FTX.
Lack of due diligence is worrisome
The host raised the issue of due diligence, and specifically the lack thereof in relation to investments in FTX. Stark asked what he could do about it. John Stark responded by quoting Sam Bankman-Fried himself:
We don’t look at the product, the service… we look at whether it’s an idea that someone can pitch to. If we think it’s something we can sell, we’re all in. Due diligence is ridiculous. The wrong way to invest. When you invest, you have to look for value and you have to look long term.
The (FTX) business model is one that the public is not familiar with…
Stark replied:
I agree that this model is weird, and to me it’s ridiculous, but… these guys are investors just like everyone else.
Which agency… should be ashamed that we are in this situation where customers lose their money and are not entitled to anything coming out of bankruptcy?
Stark responded to government agencies, pointing out that they had won many cases; They stopped ICOs, loan programs, contracts for future tokens, they stopped Coinbase From doing a lending program… they’ve been very aggressive and are going to be even more aggressive when it comes to these crypto intermediaries.
He said he would be ‘shocked’ if regulators did not meet with FTX:
You try not to meet con artists.
Prompted by the host to discuss “dinner meetings” between Banker-Fry And government officials said those incidents were not indictable crimes, just poor judgment.
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