Cathie Wood Issues Memecoin Warning, Says ‘Millions’ Will End Up Being ‘Worthless’
The founder and CEO of the investment management firm ARK Invest is warning the public of the risks of trading memecoins.
In a new interview on Bloomberg Crypto, Cathie Wood says that the U.S. Securities and Exchange Commission (SEC) did an important thing in declaring that memecoins are not securities.
“What they essentially were saying is we are not going to regulate them and it’s buyer beware, so I have one message for those listening who are buying memecoins, buyer beware. I think the message is loud and clear from the regulators.”
She says that many memecoins will eventually lose their value.
“What we think will happen is there will be some fearsome declines in the prices of some of these meme assets and there’s nothing like losing money for people to learn. Now learn that the SEC and regulators are not taking responsibility for these memecoins.”
Wood says that while the leading crypto assets are bound to become more valuable, this is not the case for the large majority of memecoins.
“The millions of memecoins will probably end up worthless. When we’re talking about the big three – Bitcoin, Ethereum, Solana, the use cases for those are multiplying and we think they’re going to become very important in the years ahead. Memecoins, not so.”
Wood also shares her thoughts on whether President Donald Trump’s memecoin will also become worthless.
“Memecoins will be collector’s items – digital collector’s items. Of course, some will withstand the judgment of time and that may be one of them, but our working assumption is that when you’re talking about millions of memecoins, you know that that’s just a step too far and most of them are not going to be worth very much.”
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Gotbit founder Aleksey Andryunin reaches settlement with US authorities, forfeits $23M in crypto
The founder of Gotbit, Aleksey Andryunin, reached a settlement with US authorities in exchange for forfeiting $23M in crypto assets. The former CEO of the market maker service faced up to 20 years for money laundering charges.
Aleksey Andryunin, CEO and founder of the Gotbit market maker reached a settlement with US authorities. Andryunin avoided a 20-year sentence for wire fraud and conspiracy to commit market manipulation, linked to Gotbit’s services as a market maker.
Gotbit was accused of inflating volumes and creating unrealistic market valuations, which created risk for retail traders. One of the most affected tokens was Neiro on Ethereum (NEIRO), which later abandoned Gotbit after gaining more clarity on its wash trading practices.
The Russian national struck a deal with Massachusetts federal prosecutors, in which he agreed to forfeit 23M in crypto assets in exchange for paying no additional fines or facing a prison sentence. The plea agreement was detailed in a letter, which urged Andryunin to plead guilty as fast as possible as part of the deal.
For now, the sentencing has not been finalized, though the most probable outcome would be the forfeiture deal.
Andryunin faced sentencing of up to $500,000 in fines, to reflect the losses caused by aggressive wash trading. He also faced prison time of between 5 to 20 years, depending on the final sentencing, unless the plea deal is finalized.
Gotbit, which has existed since the 2017 bull market, was finally implicated in aggressive market-making services after the FBI launched a honeypot token. Several market markers were affected, but Gotbit was one of the most prominent cases. After the investigation, Andryunin was apprehended in Portugal and extradited to the USA for trial. The plea deal may mean Andryunin loses his right to stay in the country.
US authorities return to crypto forfeiture
The assets belonging to Gotbit have been stored in wallets controlled by Andryunin. The plea deal outlined the known addresses, which mostly contain stablecoins. After the forfeiture, the assets will be added to the crypto stockpile controlled by the US Government.
Andryunin’s wallets contained over $9M in USDT in one address, $4M in USDC and two more wallets holding $4.9M and $4.7M in USDT.
Andryunin will have to cooperate in moving the ownership of those assets to the US government wallets. For now, it remains uncertain what the tokens would be used for. The addresses have not been frozen or blacklisted by either Tether or Circle, and the tokens are fully available.
The US Government still holds over $17.4B in crypto assets, including 122M USDT from forfeitures. The assets have not been auctioned for years, and the growing portfolio has suggested the creation of a crypto reserve using the forfeited assets.
Gotbit damaged the reputation of crypto projects
Gotbit’s activity was hardly noticed during the previous bull markets, as traders were still inexperienced. The meme token boom, however, drew attention to the practices of wash trading, especially for new assets.
On-chain investigator ZachXBT was among the first to track down assets connected to Gotbit. Those tokens were often facing pumps and crashes, causing deep losses for traders.
Among assets linked to Gotbit were Neiro on Ethereum (NEIRO), as well as Hamster Kombat (HMSTR) and Baby Doge.
NEIRO and its community were the first to react and save the token, returning to less liquid but organic trading. Without the involvement of Gotbit and the market hype, NEIRO returned to $0.0002, mostly relying on its loyal community.
Gotbit’s move was to anticipate token launches and immediately perform a 10X growth pump, which served to attract the attention of traders. This also allowed insiders to sell a maximum amount of tokens at a higher price, leaving a wider community of holders with a depreciating asset.
Gotbit’s actions were behind the success of the earlier wave of meme tokens, boosting memes that claimed their success was due to the community. Some of the traders even dismissed the effect of Gotbit as one of the natural features of token trading. Currently, market makers are still participating, though with less aggressive strategies. Wintermute remains one of the key market makers, with no claims of illicit activities or fake token pumps.
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