On August 23, the U.S. Securities and Exchange Commission (SEC) rejected all of the pending derivative-backed Bitcoin exchange-traded funds (ETFs) filed by ProShares and Direxion.
According to Jake Chervinsky, a government enforcement defense & securities litigation attorney for Kobre Kim LLP, the SEC disapproved all seven ETFs because of the risk of market manipulation and fraud involved.
What Did ProShares and Direxion Try to do?
Last month, the U.S. SEC officially rejected the ETF proposal filed by the Winklevoss twins, citing market manipulation as a major concern. The Winklevoss twins used Gemini, a strictly regulated cryptocurrency exchange, to establish the value of Bitcoin.
But, the SEC argued that because Bitcoin markets are not inherently resistant to manipulation, relying on a single exchange to determine the value of a Bitcoin ETF, which has the potential to lead billions of dollars in new capital into the market, is of high risk.
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