After Jamie Dimon’s much publicized rant against Bitcoin, and the subsequent disclosure that JPMorgan & Chase Securities are actively trading an instrument linked to the price of Bitcoin, the investment bank has been accused of market manipulation by London based company Blockswater.
Was Jamie Dimon Manipulating the Bitcoin Markets With His Rant?
Blockswater, a provider of “liquidity for blockchain based assets,” has filed a market abuse report with Swedish Financial Supervisory Authority alleging Dimon and JPM breached Article 12 of European Union’s Market Abuse Regulation (MAR) policy. The EU’s European Securities and Markets Authority (ESMA) website states that “the concept of market abuse typically consists of insider dealing, unlawful disclosure of inside information, and market manipulation.”
Dimon had labelled Bitcoin a “fraud”, threatened to fire any employee trading Bitcoin for being “stupid” and said that the cryptocurrency was “not a real thing,” and was destined to “blow up.”
Florian Schweitzer, managing partner at Blockswater, believes Dimon “knew, or ought to have known, that the information he disseminated was false and misleading” and that his statement clearly “smells like market manipulation.” The billionaire CEO’s tirade coincided with the Chinese government’s banning of Bitcoin exchanges, which saw prices drop around 30 percent.
In the filing, Schweitzer argues that the much maligned CEO’s public assertions “did not only affect the reputation of bitcoin, they harmed the interests of some of his own clients and many young businesses that are working hard to create a better financial system.”
It could be however, that Dimon is simply an experienced media figure with expertise in provoking the masses; his smackdown of Bitcoin came on the day JPMorgan & Chase reported a 20 percent reduction in trading profits on a year over year basis. It could certainly be argued that Dimon launched the attack on Bitcoin to divert attention away from such a significant decrease in trading revenue.
Even so, the punishment for market manipulation seems to be monetary in nature, something which would prove no issue for a firm as big and as wealthy as JPMorgan & Chase. In fact over the last decade they have already been fined over $26 billion dollars worldwide for a number of different indiscretions including mortgage fraud and bribery.
Punishment for JPMorgan and Jamie Dimon Unlikely
In the US, where most of the fines were issued, the unwritten rule of fining firms and not sending executives to prison, stems from an informal opinion commonly known as ‘The Holder Memo’. Written by the former Obama administration Attorney General Eric Holder, the original Clinton-era memo concluded that fining firms for crimes committed was more effective than sending the guilty to jail because the government would often find it hard to effectively prosecute the cases, and that many of the firms were so systemically important to be a risk to the entire system if they were disrupted, shuttered or sold off.
While both JPMorgan & Chase and Jamie Dimon are unlikely to be sued or charged with any crime, a case could certainly be made that Dimon had an agenda when he made his comments relating to Bitcoin. Further to this, even if he were to be found guilty there is very little chance anything at all would happen beyond a token financial fine.
Do you think Dimon was trying to manipulate the bitcoin markets? Share your thoughts in the comments below.
Images via CBS News, Wall Street Journal