Subject: File No. SR-NYSEArca-2021-90
From: Jorge Stolfi

Apr. 18, 2022

Dear SEC,

Please DO NOT authorize the Grayscale bitcoin ETF. The
reasons why you rejected previous ETF proposals are still
valid and should be sufficient to deny this one (and any
future ones) as well.

But if you need any other reasons:


Bitcoin's only significant use as money and payment system is
as a money laundering tool for criminals.  It alone created the
epidemic of ransomware, a virtually unknown form of attack
that has now become the major form of cybercrime, globally
and in the US:

From this article

  "A 2017 report from Cybersecurity Ventures predicted
  ransomware damages would cost the world $5 billion (USD)
  in 2017, up from $325 million in 2015 - a 15X increase in
  just two years. The damages for 2018 were predicted to
  reach $8 billion, for 2019 the figure was $11.5 billion,
  and in 2021 it's $20 billion - which is 57x more than it
  was in 2015."

Bitcoin has also allowed the existence and flourishing of the
the so-called "dark markets", notably the drugs-by-mail
sector, which has caused thousands of excess deaths by
fentanyl and fentanyl-laced heroin overdoses among

From this recent article

  "Two-thirds of the approximately 70,000 overdose deaths in
  the U.S. in 2017 involved an opioid, according to the U.S.
  Centers for Disease Control and Prevention. Overdose
  deaths involving the drugs have increased almost sixfold
  during the past two decades. ... The DEA official said
  estimates of illicit transactions, including for drugs,
  conducted in bitcoin reach $76 billion annually ... 'Now,
  it's more prevalent than before. [said police Sgt. Joshua
  Lee of the Mesa, Arizona] Bad guys are realizing they're
  less likely to get caught if they move stuff to the dark

In these roles, bitcoin has taken the place of the defunct
rogue a replacement for the defunct internet "criminal bank"
Liberty Reserve, for the same reason: it is the only
available internet payment system that totally ignores
KYC/AML laws. For this same reason, thousands of other
commercial and investment frauds have chosen to use bitcoin
as the payment method. While some law enforcement agencies
may have grown fond of Bitcoin, because they got tracing
tools that let them catch small criminals with little
effort, the vast majority of the perpetrators of
Bitcoin-enabled crimes go unsolved and unpunished.

In contrast, Bitcoin has failed to gain any acceptance as a
currency or payment system for legal commerce or other legal
economic activity, in spite of 10 years of intense promotion
towards that goal. That is not surprising once one learns
that it is absolutely awful at those roles, in all aspects.
Its value is way too volatile to use as money, often varying
by more than 10% in a matter of minutes. Its network is
*inherently* expensive to operate, currently consuming more
than 50 USD of electricity per transaction processed. The
time for the network to confirm validity and execution of a
payment ranges from 10 *minutes* to several weeks, depending
on load (whereas credit cards confirm in about 10
*seconds*). And any more.

Would the SEC authorize an ETF whose portfolio is to consist
exclusively of shares of a taxi company whose services are
restricted to getaway rides for bank robberies? Or of a
construction company that specializes in secret tunnels
under the Rio Grande? Or of a shipping company whose fleet
is a dozen pocket submarines plying the Colombia-Florida


Bitcoin is widely and loudly promoted (even by GBTC and its
founding investors) as an investment instrument, a better
alternative to stocks, bonds, and gold. However, Bitcoins
are quite unlike gold, because they have no consuming demand:
uses that would take them out of the market in an
essentially permanent basis (like jewelry and industry do
with gold). Thus they don't have the intrinsic value that
gold, like any commodity, has. Bitcoins are also quite
unlike stocks, because there is no source of revenue (like
the clients of a company) that will return to the
holders of Bitcoins a single penny of their investment,
in any form or by any means. And they are unlike bonds,
because there is no entity that has any obligation to
redeem those coins, at any future time and for any
predefined price.

The only way for a Bitcoin investor to recover his
investment, let alone make a profit from it, is by selling
the coins to another investor. Thus Bitcoin perfectly fits
the definition of Ponzi scheme, as given in dictionaries
and by the SEC itself

  "A Ponzi scheme is an investment fraud that pays
  existing investors with funds collected from new investors."

In fact, Bitcoin is not just a zero-sum con game, as the
definition implies. The operators of the network (the
so-called "miners") are still issuing new coins, about 900
per day, which they sell to investors. Thus Bitcoin
investors, as a whole, are losing money -- about 40 million
USD every day. From 2009 to the present, it is easily
calculated that all the people who ever bought any Bitcoins
have spent at least 20 billion USD more buying than they
received selling. Since there is no other source of money in
the game than the investors themselves, that net loss (half
of which accumulated in the past two years) cannot ever
decrease. As long as Bitcoin will have a positive market
price, that loss is mathematically guaranteed to increase.

The main losers of the Bitcoin Ponzi are estimated to be
several million believers, mostly with low or no income, who
keep "investing" their savings and spare money into this
"revolutionary asset", believing that they are getting
richer -- when actually, as in any Ponzi, they lost their
money the moment they "invested" it. But there are a few
winners, who, having bought hundreds of thousands of coins
many years ago, have now became *really* rich --billionaires
even -- by taking the money of those victims.

Would the SEC authorize an ETF whose portfolio is defined to
consist only of lottery tickets, or slots in an investment
pyramid, or franchises of an MLM fraud, or shares of a penny
stock that is being pumped up and sold to pensioners through
email spam?


Bitcoin does not provide any benefits for society; on the
contrary, it has caused enormous damage; and this balance
cannot ever improve, because the technology is inherently
wasteful, impractical, illegal, and insecure.

By logic, the SEC should assert its regulatory authority
over ALL cryptocurrencies (since they do tick all the boxes
of the Howey Test), then ban the sale and promotion of
Bitcoin and any derivative financial instruments, and
criminally prosecute its operators, sellers, promoters,
brokers, exchange operators, and all those who have
profited from it -- just as they have historically
done with the participants of other Ponzi schemes. The US is
indeed losing its lead on "blockchain technology",
"decentralized finance", and "Web 3.0" to China -- because
China already banned all that toxic financial scam-fest, while
the US still did not.

I understand the operational and political obstacles that
currently prevent the SEC from taking this very necessary
course of action. But, at the very least, the SEC should clearly
warn the public about the inherent Ponzi and money laundering
nature of Bitcoin; and state clearly that any proposals for
securities that are in any way based on Bitcoin will be
henceforth rejected ipso facto, without further analysis or


Jorge Stolfi
Ph. D. in Computer Science, Stanford University, 1988
Full Professor, Computer Science Institute of the
State University of Campinas (UNICAMP), Brazil

PS. I should note that, while I am not a citizen or resident
of the US, the decisions of the SEC will strongly affect my
country, because our financial regulators generally follow
the examples and policies of their US counterparts. In
particular, they are unlikely to take any action against the
cryptocurrency plague as long as the SEC continues to ignore
it. That is why I feel compelled to contribute this response
to your request for comments.