• John Stark, a former chief of the SEC office of internet enforcement, joined CNBC’s ‚Squawk Box‘ to discuss the collapse of crypto exchange FTX.
• He discussed the lack of due diligence from investors who were investing in FTX, citing Sam Bankman-Fried’s quote “We don’t look at the product, service, etc…we look at whether this is an idea we can pitch to someone. If we think this is something we can sell, then we’re all in.”
• He defended the state agencies, pointing out they’ve won many cases, stopping ICOs, lending programs, agreements for future tokens, etc.

John Stark, a former chief of the SEC office of internet enforcement and president of John Reed Stark Consulting, recently joined CNBC’s ‚Squawk Box‘ to discuss the collapse of crypto exchange FTX. The host of the show raised the issue of due diligence, more specifically the lack thereof where investments in FTX were concerned.

John Stark responded by quoting Sam Bankman-Fried himself: “We don’t look at the product, service, etc…we look at whether this is an idea we can pitch to someone. If we think this is something we can sell, then we’re all in. Due diligence is absurd. It’s just the wrong way to invest. When you invest, you should look for value, you should look for the long-term. The (FTX) business model is something the public isn’t used to…”

Stark agreed that the model is different, but also noted that these are investors like everyone else. He then asked which agency should be ashamed that customers have lost their money and have no claims on anything coming out of bankruptcy.

In response, Stark defended the state agencies, pointing out that they had won many cases, stopping ICOs, lending programs, agreements for future tokens, and other issues. He noted that dinner meetings between Bankman-Fried and government officials were „bad judgment“ and that the SEC had done its best to mitigate the risks associated with investing in crypto.

Overall, Stark stressed the importance of doing due diligence before investing in any type of asset, including crypto. He noted that investors should look for value and the long-term potential of their investments, rather than relying on a “quick fix”.