For the CEO of JP Morgan, cryptocurrencies are Ponzi schemes

In a hearing before the US Congress, Jamie Dimon, CEO of JP Morgan Chase, said that crypto are “decentralized Ponzi schemes.”

Questioned Wednesday at a hearing on the rapid development of digital assets, the phrase “I’m a big skeptic about cryptographic tokens you call currency” addressed to Josh Gottheimer (D-NJ) and lawmakers in the US Congress by Jamie Dimon, CEO of JPMorgan Chase & Co. had a huge reaction. 

“The idea that it is good for anyone is incredible, billions of dollars are lost every year through cryptocurrencies, linking cryptocurrencies to crimes such as ransomware payments, money laundering, sex trafficking and theft. Cryptocurrencies are dangerous.”

The CEO also spoke on the issue of stablecoins, which he said are not a problem at all:

“There would be nothing wrong with a stablecoin, which is like a money market fund, properly regulated. JPMorgan is a big blockchain user.”

Even in the past Dimon had intervened with harsh phrases on digital currency assets.

He once asserted that Bitcoin is worthless and questioned the limited supply of the currency by indicating that the number of BTC in circulation would be well above the 21 million claimed by the protocol.

Despite this (perhaps speculative) aversion, JP Morgan‘s CEO is a big fan of blockchain and decentralized finance. 

JP Morgan and its CEO, differing views on crypto and blockchain

While criticism rains down at least at the top executive level, there is also business being conducted with the “enemy.” 

The world’s largest investment bank has issued its own digital currency, JPM Coin, and opened a lounge in the metaverse. 

Criticizing from the top, especially when it is the CEO of the company who is the one doing so, inevitably carries a lot of weight, but those on the ground are not always of the same opinion. 

Many analysts including Nikolaos Panigirtzoglou, who are on the ground and are actually hands-on with market opportunities, have different views on the crypto world. 

In May this year, Panigirtzoglou published a report stating:

“The bank has replaced the real estate sector with digital assets as our preferred alternative asset class alongside hedge funds.”

How much the company CEO’s statements correspond to what he really believes in and how much his words are an attempt to manipulate market for profit cannot be determined, but some precedents suggest that the manipulation trail may not be far from reality (while still remaining in the realm of speculation).

In the past, some JP Morgan executives and the company itself had already been grazed by some legal problems to which they are still being held accountable in terms of image.

The charges brought against some JP Morgan executives

Gregg Smith and his colleague Michael Nowak, both former JP Morgan executives at the time of the events, were convicted of fraud for manipulating prices in the precious metals market and spoofing in an eight-year scheme. 

The two former executives gave orders that were allegedly abruptly canceled before execution in order to inflate the prices of orders they wanted to execute on the opposite side of the market, specifically on the New York Mercantile Exchange Inc. (NYMEX) and Commodity Exchange Inc. (COMEX), the commodity exchanges run by CME Group Inc.

Polite Jr. A., Deputy Attorney General of the Justice Department’s Criminal Division, said:

“Today’s jury verdict demonstrates that those seeking to manipulate our public financial markets will be held accountable and brought to justice. With this verdict, the Department secured the convictions of ten former Wall Street financial institution traders, including JPMorgan, Bank of America / Merrill Lynch, Deutsche Bank, The Bank of Nova Scotia and Morgan Stanley. These beliefs underscore the Department’s commitment to pursuing those who undermine public investor confidence in the integrity of our commodity mark.”

The Deputy Director, Luis Quesada, of the FBI’s Criminal Investigation Division, then continued:

“For years the defendants would have placed thousands of fake orders for precious metals, creating a ploy that led others to make profitable trades. Today’s belief shows that no matter how complex or lengthy a plan is, the FBI is committed to bringing those involved in crimes like this to justice.”

It is not only the legal precedents related to the company and JP Morgan’s modus operandi but also its behavior over time that suggests Dimon’s intervention is likely speculative when we think of predictions made in the recent past by analysts at the powerful investment bank.

JP Morgan analysts study the price of Bitcoin

According to their estimates from last May, the currency’s fair value is confirmed to be $38,000, which is the same value they assigned to it in February, but with one difference: in February BTC was priced at $43,000, while today it is around $19,000. 

In regard to the value, the same Nikolaos Panigirtzoglou mentioned above had stated that:

“Last month’s cryptocurrency market correction (referring to April-May) looks more like capitulation than last January / February and moving forward we see an upside for the bitcoin and cryptocurrency markets more generally. VC’s funding trajectory would be crucial to help the cryptocurrency market avoid the long winter of 2018/2019.”

A rethinking of views is always possible, and Dimon expressed his thoughts even if divergent from the team of analysts he heads and who on his behalf are in charge of the historic company’s vision.

The words of the top executive at the Congress had an extraordinary echo and were highlighted by all the most important newspapers, not only in print, but also online and on social media as also found in the tweet of Bitcoin News:

“I’m a major skeptic on #crypto tokens which you call currency, like #bitcoin. They are decentralized Ponzi schemes,” said Dimon. #cryptocurrency $BTC https://t.co/IliHfGE7gQ

— Bitcoin News (@BTCTN) September 22, 2022

“I’m a big skeptic about crypto tokens you call currency, like Bitcoin. They are decentralized Ponzi schemes, said Dimon.”