Wells Fargo, An Anti-Bitcoin Bank, Involved In Billion-Dollar Scandal
It is always so amusing to see banks cry foul about Bitcoin. It’s not a surprise though. Throughout history, the proponents of older technology have always criticized newer technology. In the end, newer technology always wins. The same happened with cars and horse carriages, post offices and the internet and the same will happen again.
Cryptocurrencies and blockchain are ushering in a new era. An era where people are in control of their own money. A future with much more financial inclusion. They literally have the power to help restructure the entire world’s financial system. This will only make things better for the entire world. The legacy system has a lot of holes and they become apparent in times of turmoil.
But bringing change is not that easy. People love familiarity. And the proponents of old technology just do not let go. This can be seen in the case of Bitcoin as well. Banks and other traditional financial corporations have been quite skeptical of cryptos. Wells Fargo, one of the biggest banks in the US, is one example of this. In fact, they are quite infamous for their anti-crypto stance.
Wells Fargo is an American banking giant that has been around for a really, really long time. As such, any perceived threat from newer technology is bound to get a strong reaction. That’s exactly what they did last year. It ceased to allow its customers to buy bitcoin or any other cryptos. The reason they cited was that the world of cryptos is highly volatile and it is unsafe for investors.
This is highly unfair and plain wrong. Users should have the freedom to invest their money wherever they see fit. Banks are the custodians of our money and not the owners of it. Therefore, they should have no say in where and how we use our money. It is because of this undue powers of the banks that people love crypto so much. Crypto gives them the freedom to use their money the way they like. No questions asked.
Of course, there will be consequences if you do something illegal with them. But for legal things, you can do whatever you wish. This is the right that Wells Fargo denied to its customers. In reality, they might just be afraid that they might lose ground to the newer technology. In a twist of irony, Wells Fargo did the exact same thing about which it was bashing Bitcoin. It put customers’ funds at risk and did something highly shady.
Wells Fargo, while criticizing Bitcoin for putting users in danger, did the exact same thing. Recently, it was charged with $35 million by the US Securities and Exchanges Commission’s (SEC). The SEC said that the bank had failed to communicate the risks of an inverse ETF to its retail customers. The SEC believes that retail investors might incur huge losses when holding single-inverse ETFs for longer than a day.
They also found out that Wells Fargo advisers and brokers didn’t even understand completely the risk of losses that are present with inverse ETFs. Even then they continued to advise their retail investors to invest in these ETFs. This was despite the SEC’s repeated warnings that the inverse ETFs might not be suitable for retail investors.
When the SEC investigated the matter, they released a statement saying that “the bank lacked adequate compliance policies and procedures with respect to the suitability of those recommendations.” Hence Wells Fargo was charged $35 million. This will mainly be allocated to investors that were harmed.
But this was not the only scandal that Wells Fargo was involved in. It was involved in a much bigger scandal. A scandal that got it charged with $3 billion in fines. For over 14 years, the bank had been involved in a “fake account scandal”. They were basically opening accounts of clients without their knowledge or consent. Not only that, but they were also signing them up for credit cards and bill payment programs.
This was only discovered in September of 2016. This led to a serious investigation. It also caused the stepping down of CEO Time Slogan, because Wells Fargo’s, reputation was also hurt really bad. Upon investigation, it was found that the bank’s employees were forced to open fake accounts. The leadership had set such unrealistic sales goals that they could simply not fulfill.
The environment inside the bank was like a pressure-cooker environment. The employees had to resort to all sorts of malpractices to meet their goals. They even went as far as forging signatures and transferred clients’ funds without their consent.
The bank has to pay $3 billion in fines and the new CEO, Charles W. Scharf, is trying to get things in order. He is trying to settle the charges and reducing the bank’s expenses. However, the damage has been done and its impact may last for a really long time.
Unfair Criticism For Bitcoin & Cryptocurrency
With Wells Fargo and many other banks indulging in malpractices like this, Bitcoin faces unfair criticism. Banks have been fined billions upon billions of dollars in the past decades. All of this because they put customers’ funds at risk and did some really immoral activities. And they are the ones that shout the loudest when it comes to Bitcoin. Such is the irony of the situation.
When it comes to regulators all around the globe, the same story is repeated. Most regulators state that the banking system is the safest system for users. For business and any transactions, banking is still considered the only way to go. Central bank officials from all around the world consider crypto as “dirty”. They wrongly state that it is only used for speculation and illicit activities. This is a really unfair criticism for crypto which time will tell.
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