Several officials in mainstream finance have repeatedly attacked the cryptocurrency industry for being too volatile and ‘ prone to scams. ‘ This sentiment was one of the main reasons why there was a hold on the number of institutions entering the cryptoverse.
While most of the fiat supporters argued that the existing financial structure worked best, the number of issues within the model has also increased. This was recently demonstrated when Wells Fargo was charged with a multi-million dollar fine by the US Securities and Exchange Commission [ SEC ].
The SEC has announced settled charges against Wells Fargo Clearing Services and its Financial Network Advisors for failing to inform its customers of the risks involved in single-inverse ETFs. Wells Fargo agreed to pay a fine of $35 million after multiple customers sued the bank for lack of adequate compliance policies and procedures related to inverse traded ETFs.
The SEC’s order found that the bank had no inverse trade ETF regulations in place between April 2012 and September 2019. According to the SEC:
“The order finds that some Wells Fargo brokers and advisers did not fully understand the risk of losses these complex products posed when held long term. As a result, certain Wells Fargo investment advisers and registered representatives made unsuitable recommendations to certain clients to buy and hold single-inverse ETFs for months or years.”
Wells Fargo has also been embroiled in controversies in the past, which begs the question: why is the fiat industry not seen with the same disapproving eyes that the crypto market is subject to? The digital asset industry, unfortunately, has its share of problems, but this has not halted developments in the market. The development has been so strong that even mainstream companies have come to the fore.
This growth dynamic did not stop US Secretary of the Treasury, Steve Mnuchin, from saying that cryptocurrencies were the bane of the financial ecosystem. He also believed that Bitcoin and other cryptocurrencies could only be used for illegal activities.
These so-called’ activities’ included cyber-crime, tax evasion, malware, extortion to name a few. Mnuchin claimed that cryptocurrencies funded large-scale projects, a comment that seemed ironic in the face of Wells Fargo’s previous $3 billion settlement. For 14 years, the bank had to pay a massive sum for mistreating its customers by messing with accounts and copying numbers.
The case was brought before the authorities in 2016 and eventually came to a conclusion last month. The bank was found to have created credit cards and accounts for its customers without their knowledge. The scale of the case stunned the financial world and led to the resignation of then CEO John Stumpf.
Cryptocurrency advocates are now expecting the SEC to give the industry a fair chance when challenges have arisen all over the world. There have also been some positive changes from the SEC, but it will be some time before regulators can make a fair decision.
