California-based asset manager Research Affiliates has called cryptocurrencies a “Ponzi scheme,” claiming that bitcoin and the blockchain technology that underpins the world’s largest digital asset are helping to promote illegal activity.
“They are a Ponzi scheme that facilitates money laundering,” said Chris Brightman Financial news on questions about his views on cryptocurrencies.
Brightman, who became managing director of the $ 168 billion asset manager in 2021, said that bitcoin is not a medium of exchange, nor is it a reliable asset or an hedge – claims by some promoters of the digital currency.
Brightman said that bitcoin was purely speculative, and made money for those who have it by selling it on to others at a higher price.
He said he was concerned about the blockchain, which some asset managers have claimed has the potential to disrupt industries. Technology has been praised for its ability to create decentralized registrations of ownership that cannot be changed or altered.
Brightman said that the more he looks at the subject, the less he finds “of substance about what the blockchain really is”.
“The question is not so much whether distributed ledger is a reasonable coding technique that can be used, the question is what legal ownership does this convey? The idea that we can somehow use distributed ledger technology to eliminate all the limitations of centuries of legal convention , is a libertarian dream. “
READ Why BlackRock is bullish on blockchain but not bitcoin
Brightman’s comments about the blockchain come after BlackRock, the world’s largest asset manager, recently indicated that it was positive about the technology because of its potential to be disruptive.
Salim Ramji, global head of iShares and index investments at BlackRock, told Financial News on June 22 that blockchain is “incredibly innovative and incredibly disruptive”.
“It takes out frictions, it enables easier transfer of value in ways that make the underlying piping of markets much more efficient for customers,” Ramji added.
In April, BlackRock rolled out its Blockchain and Tech ETF, which gives investors broad access to companies involved in blockchain technology. ETF’s portfolio of 33 companies invests in Coinbase, Riot Blockchain and Galaxy Digital.
Bitcoin and other cryptocurrencies continue to withstand price fluctuations as a so-called cryptocurrency winter sweeps over the industry. Bitcoin is now trading below a key level of $ 20,000 and is down more than 70% from a peak it reached in November 2021.
READ Amundi and PGIM warn of crypto winter: ‘This crash feels different’
Celsius, which has grown to become one of the world’s largest cryptocurrency lenders, with more than $ 12 billion in deposits, has frozen all withdrawals. It cited “extreme market conditions” in a June 12 announcement and has since hired restructuring consultants from the consulting firm Alvarez & Marsal to help with a possible bankruptcy.
Elsewhere, crypto-focused hedge fund Three Arrows Capital, co-founded in 2012 by Zhu Su and Kyle Davies, has fallen into liquidation. The collapse followed the revelation by cryptocurrency broker Voyager Digital that the hedge fund had defaulted on a loan worth $ 675 million, which was distributed in the form of 15,250 bitcoin and $ 350 million worth of USD Coin, a stable currency linked to the US dollar.
Meanwhile, Coinbase, the world’s largest cryptocurrency exchange, said it plans to remove around 1,100 jobs – representing around a fifth of the workforce.
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