• John Stark, a former chief of the SEC office of internet enforcement, joined CNBC’s ‚Squawk Box‘ to discuss the collapse of crypto exchange FTX.
• He raised the issue of due diligence, more specifically the lack thereof where investments in FTX were concerned.
• Stark defended the state agencies, pointing out they’ve won many cases; they stopped ICOs, lending programs, agreements for future tokens.
John Stark, a former chief of the SEC office of internet enforcement and president of John Reed Stark Consulting, recently joined CNBC’s ‚Squawk Box‘ to discuss the collapse of crypto exchange FTX. During the show, Stark raised the issue of due diligence, more specifically the lack thereof where investments in FTX were concerned. He asked what can be done about that, to which Stark responded by quoting Sam Bankman-Fried himself: „We don’t look at the product, service, etc…we look at whether this is an idea we can pitch to someone. If we think this is something we can sell, then we’re all in. Due diligence is absurd. It’s just the wrong way to invest. When you invest, you should look for value, you should look for the long-term. The (FTX) business model is something the public isn’t used to…“
Despite his agreement with the unconventional approach to investing, Stark defended the state agencies, pointing out that they’ve managed to win many cases. In particular, they have stopped numerous Initial Coin Offerings (ICOs), lending programs, and agreements for future tokens. He noted that the situation is nevertheless concerning, as customers have lost their money and have no claims on anything coming out of bankruptcy.
Stark further discussed the need for due diligence when it comes to investing in cryptocurrency. He highlighted the importance of researching the product, service, and team behind the investment, rather than simply looking at the idea of the project. He also stressed the importance of focusing on the long-term value of the investment, rather than short-term gains.
The discussion between Stark and the host of Squawk Box raised important points regarding the need for due diligence when it comes to investing in cryptocurrency. Investors should take the time to research the product, service, and team behind the investment, and focus on the long-term value of the project. Furthermore, investors should be aware of the risks associated with investing in cryptocurrency, as they could potentially lose their money and have no claims on anything coming out of bankruptcy.