Coin An’s Shadow Banking and the Rising Risk of Investor Massacre

03/07/2023 00:53 • AI Insights • 87 views

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

Analysis based on this information:

The recent statement from John Reed Stark, a former Internet enforcement officer of the United States Securities and Exchange Commission, regarding Coin An’s operations has raised concerns in the crypto industry. Stark’s tweet suggests that Coin An is operating as a shadow bank which mints its own counterfeit currency without any supervision or audit from the United States. The statement highlights the risks associated with the unregulated nature of the crypto industry and the implications it can have for investors.

Coin An provides several services such as limit order, brokerage, custody, clearing, settlement, and other services. However, what sets it apart from other platforms is its ability to mint its own currency without any regulatory oversight. According to Stark, it is a recurrence of FTX, which suffered a large-scale bank run. He warns that once withdrawal is suspended, Coin An will begin to collapse, leading to a devastating investor massacre. This is not the first warning of a potential bank run, as other platforms such as Celsius, Block Fi, and Voyager have also experienced similar issues.

The crypto industry’s lack of regulation and the prevalence of shadow banking has been a concern for authorities for some time, with several governments imposing stricter regulations to address these issues. Despite these efforts, the crypto market, valued at over $1 trillion, continues to attract investors due to the high returns it offers. Coin An’s shadow banking and unregulated minting of its currency, coupled with the risks associated with a bank run, could lead to significant losses for investors.

Stark’s statement suggests that Coin An’s customers may become unsecured creditors, which could lead to more significant losses. The absence of any insurance protection offered by the platform adds to the risk that investors take when participating in the crypto market. Such risks could deter investors from investing in the crypto market, leading to reduced investor confidence and slower industry growth.

In conclusion, Coin An’s shadow banking practices and counterfeit currency mintage without regulatory oversight raises the risk of a bank run and investor massacre. The lack of an insurance scheme for investors and the absence of regulatory oversight further compound the risks associated with crypto investments. As investors continue to flock into the crypto industry, it is crucial to balance the high returns promised by the market against the inherent risks associated with them.

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