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JP Morgan And Two Instances of Fraud

Blog 01 - B (Nov-24-2017)
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It’s nothing new to say that suspicions abound in the financial system. Though we occasionally read about banks getting caught and fined for anything from minor regulatory infractions to outright fraud, we often don’t hear about the “legal” fraud--the “deceptions” intended to garner financial gain at the expense of the people these institutions were established to serve--that frequently goes on behind the scenes.

Jamie Dimon made his point clear, calling anyone who buys it “stupid,” and saying that the Bitcoin craze is “worse than tulip bulbs,” referring to 17th Century Tulip Mania phenomenon.

He supported his argument by stating that fiat “currencies have legal support,” not only implying that currencies are considered “legal tender,” but insinuating that Bitcoin, operating beyond the regulatory controls of banks and governments, may facilitate and perpetuate illegal transactions and money laundering.

Fine. That’s his professional and moral opinion. Privately, however, his actions point to the contrary, rendering his statements not only contradictory, but making them outright lies.

As soon as Dimon publicly expressed his opinion on the cryptocurrency, Bitcoin prices plunged. And guess who was the 4th largest buyer of Bitcoin? JPMorgan!

Though a deceptive and “fraudulent” maneuver, JPM’s actions weren’t prosecutable, unlike those of its Swiss subsidiary:

“FINMA ruled on June 30 that JPMorgan Switzerland had “seriously infringed” regulatory oversight provisions, according to a ruling issued by the Federal Administrative Court on Nov. 8 and published on Thursday. The case involved a “violation of obligations of diligence on questions of money-laundering,” the court document said.”

Media outlet  Die Handelszeitun details the account of FINMA’s ruling against JPMorgan.

Main points:

  • Dimon railed against Bitcoin, threatening to fire any employee who was stupid enough to buy it, yet JPMorgan was the fourth largest buyer of Bitcoin after it had collapsed (most likely due to his negative statements).
  • Dimon called Bitcoin “fraudulent” due to, among other things, its lack of legal recognition and regulation, yet his Swiss arm was allegedly involved in a money laundering scheme.

Let’s now move from Bitcoin to the introduction of Bitcoin Futures.

Here’s a statement from Terry Duffy, Head of the Chicago Mercantile Exchange (source Business Insider):

Here’s the problem: Duffy is well aware that futures trading is not for every investor. The CFTC and NFA have made it mandatory for brokerages to warn all futures traders of the risks involved, namely, that you can lose more than you have in your account if you are not careful.

To trade futures, you must have a sufficient amount of “risk capital,” a requirement that eliminates most “young people,” who have neither adequate experience nor capital to engage in these volatile markets, let alone the Bitcoin futures market.

Take a look at the average net worth of young Americans:

Despite the lack of income to invest in sound assets, let alone “gamble,” in the futures market, Terry Duffy sees Bitcoin futures as “an acquisition play” to attract “young people” many of whom “don’t even know what futures are today.”

Deliberately deceptive? Yes, absolutely. Fraudulent in the “legal” sense of the word? No. Reflective of a culture that seeks profits over the interests of the average American citizens? Definitely.

But that’s the culture of American banking and finance.

And these are just a few reasons to be wary of their their ways; a few reasons to stash your nest egg well beyond their reach.

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All articles are provided as a third party analysis and do not necessarily reflect the explicit views of GSI Exchange and should not be construed as financial advice.

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