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What Raises Concerns About JPMorgan’s Involvement in the Bitcoin ETF?

JPMorgan, one of the largest banks in the world, has been listed as an authorized participant in the BlackRock Bitcoin ETF, meaning the bank could act as a custodian for the new Bitcoin product. This might alarm some who are familiar with JPMorgan’s dealings in other markets.

Basically, JPMorgan has gained a reputation of sorts since the collapse of financial markets during the 2008 recession. The financial juggernaut has been viewed with scrutiny by investors and regulators alike, and while it is rather common for a major financial institution in the US to face a number of lawsuits each year, JPM excels at this, resulting in some considerable penalties.

Most recently, JPMorgan, whose origins go back to 1854, reached a tentative settlement in a legal claim by a woman that the US bank knowingly profited from sexual abuse suffered at the hands of financier Jeffrey Epstein. The number of plaintiffs grew to 100 women or more and is placed at $290 million.

The biggest fine revolves around JPMorgan’s precious-metals traders who consistently manipulated the gold and silver market over a period of seven years. JPMorgan agreed to a settlement of more than $920 million and admitted guilt in the federal US market manipulation probes into its trading of metals futures and Treasury securities. JPMorgan traders had engaged in “spoofing”, which attempts to create the illusion of demand or lack of demand.

JPMorgan was fined a whopping $5.29 billion in 2012 for “robo-signing” affidavits in foreclosure proceedings, entailing “deceptive practices in the offering of loan modifications; failures to offer non-foreclosure alternatives before foreclosing on borrowers with federally insured mortgages; and filing improper documentation in federal bankruptcy court.”

In 2014, JPM was fined $1.34 billion for its role in currency manipulation, alongside UBS, Citigroup, and Royal Bank of Scotland for currency manipulation and collusion-like efforts. JPM even got into trouble for its undertakings in the municipal bond market.

JP Morgan settled an anticompetitive case with the U.S. Department of Justice (DOJ) in which it was forced to admit wrongdoing and knowledge of its illegal actions. “By entering into illegal agreements to rig bids on certain investment contracts, JPMorgan and its former executives deprived municipalities of the competitive process to which they were entitled,” said Assistant Attorney General Christine Varney of the case. The charges stemmed from actions the company took from 2001 to 2006.

Those are just some of the fines. Bitcoiners would do well to recognize that a rather infamous Wall Street bank is likely to play a very important role in the Bitcoin ETF, and the industry might one day soon watch as JPMorgan faces record fines for their behavior in the Bitcoin ETF market.

This is what’s known as counterparty risk. And, as any Bitcoiner knows, it’s not good. That’s why the industry has long tried to advocate for the power of cold wallets and individuals holding their bitcoins themselves. That removes the chance for them to suffer the consequences of a third party holding onto the bitcoin. It also precludes JPMorgan from one day holding a large percentage of the overall Bitcoin supply.

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