by Liam J Kelly
Following recent comments about Bitcoin being a fraud, JPMorgan Chase CEO Jamie Dimon is facing an accusation of manipulating the market, appearing to force BTC-USD lower on his well-publicized criticism.
Bitcoin Slides After Dimon’s Remarks
City A.M. reported on September 21 that Blockswater, a Swedish liquidity provider, filed a market abuse report against J.P. Morgan. The accusation followed a tirade conducted by the company’s CEO, Jamie Dimon, who said that he would fire any of his employees for trading in bitcoin.
Dimon reported last week that he would “fire them in a second… For two reasons: it’s against our rules, and [the employees in question] are stupid. And both are dangerous.” Dimon among many others seem bent on continuing to portray bitcoin, and other cryptocurrencies for that matter, as an exclusively illicit trading objective.
These statements, as well as declaring Bitcoin a “fraud, which is good only for murderers and drug dealers” at a Barclay’s speaking event, sent the cryptocurrency into a downward spiral. Ethereum also dropped 4.81 percent to $279.55 shortly following Dimon’s comments.
The comments mentioned above made by Dimon and consequent dip in the price of cryptocurrencies led Blockswater to report a violation of the European Union’s Market Abuse Regulation.
In the complaint, the company noted that:
“Nasdaq Nordic, where exchange-traded notes on bitcoin are listed, defines the term ‘market manipulation’ in accordance with the EU’s definition as “dissemination of information through the media, including the internet, or by any other means that gives, or is likely to give, false or misleading signals as to Listed Products, including the dissemination of rumors and false or misleading news, where the person who made the dissemination knew, or ought to have known, that the information was false or misleading.”
It should also be noted that J.P. Morgan traded bitcoin derivatives on the Stockholm-based Nasdaq Nordic exchange before and after Dimon’s statements.
Florian Schweitzer, a managing partner at Blockswater, finds it hard to believe that Dimon had not recognized the effects his words would have on the currency. Schweitzer and his colleagues also declared Dimon’s actions, “as a clear case of double standards and [that] it smells of market manipulation.”
They also wish to make it clear that J.P. Morgan, “harmed the interests of some of [their] own clients and many young businesses that are working hard to create a better financial system.”
Turning a Blind Eye to EBT Card Fraud
If not exclusively to manipulate the market, J.P. Morgan also has another interest in attacking Bitcoin. In 2010, Obama passed the Healthy, Hunger-Free Kids Act, which effectively helped to feed 31 million of America’s poorest public school students. This is only relevant because JP Morgan is also responsible for administering almost half of all states’ EBT programs.
More importantly are the profits that the bank rakes in; “18 of the 24 states JP Morgan handles have been contracted to pay the bank up to $560 million since 2004. Since 2007, Florida has been contracted to pay J.P. Morgan $90.35 million. Pennsylvania’s seven-year contract totaled $112.5 million. New York’s seven-year contract totaled more than $126 million.” These massive profits, reported by The Daily Beast, are amassed in a market which is vulnerable to rampant fraud and abuse without any notable repercussions being assumed by J.P. Morgan.
If the welfare state is victim to J.P. Morgan’s morally questionable distribution of funds, then Dimon’s recent statements reveal the bank to be victim to Bitcoin. Bitcoin has the potential to directly compete, as illustrated by the UK’s Department for Work and Pensions experiment to create a cryptocurrency to distribute benefits to claimants. Although governments have not put such a bitcoin payment system in place, in areas such as charity and philanthropy it has already proved its worth.
Symptomatic of Growth
Though this week shows a rebound in the price of bitcoin, readers should be aware of Satoshi’s vision for what cryptocurrencies could do and what they are currently doing. In China, they are already upsetting governmental control, and J.P. Morgan seemed forced to confront growing competitors to the banking conglomerate.