Bitcoin and cryptocurrencies are illegal: this is the opinion of Davide Serra. The CEO of Algebris stated this in an interview with the prestigious Italian newspaper Il Sole 24 Ore.
In the article, Davide Serra analyses the GameStop case. With his Algebris (which offers investment solutions in stocks, bonds and more), he dodged the storm that brought Melvin Capital to its knees, but his analysis of what happened is decidedly critical:
“This time it was the small day-traders who taught the big investors a lesson. There was an insane amount of short selling on GameStop by some hedge funds, even more than 130% of the existing shares, which makes no economic sense. Somebody noticed this and the buying started, triggering a short squeeze”.
However, he says, short selling is not as widespread a phenomenon as people would like to believe, as it only affects 2% of shares on the market.
“In many cases, it was only thanks to the actions of a few bearish hedge funds that some recent corporate frauds – such as Wirecard in Germany or, on a smaller scale, Bio-On in Italy – came to light. In the case of GameStop, however, it is different: everyone was aware of the company’s crisis situation, but it is inadmissible to allow the accumulation of short positions worth $2 billion on a company that is worth $1.5 billion”.
This time around, retail investors participated, those who found themselves inside WallStreetBets‘ Reddit group and invested using the Robinhood app.
It is a phenomenon that gives pause for thought but does not worry Davide Serra, who, says:
“It’s certainly a phenomenon to think about, but the impact on company valuations can be skewed for a few days or weeks. This is not the main problem, then it comes back to the real value”.
However, he continues:
“This was an isolated case precisely because of the anomaly in the size of the short. The real fear that there is on the market, more than the risk of emulation, is to wait to see if some large investor is likely to fail with repercussions on the system or if instead the situation is under control”.
And now attention seems to be shifting to Bitcoin and cryptocurrencies. Dogecoin prices have been pumped up, as well as (miserably) those of XRP. Who knows, maybe the focus will shift to Bitcoin. It is not a subject that interests the British-Italian entrepreneur, who on cryptocurrencies is clear:
“My opinion on cryptocurrencies is very simple: they are not currencies, they are an illegal payment system and not recognized by central banks and states. I would not recommend it to a private investor who cares about his investments also from an ethical point of view”.
About Davide Serra
Davide Serra is the founder and CEO of Algebris. He has a background in Morgan Stanley and UBS. He is considered one of the leading experts in financial services and for this reason, he has often been an interlocutor with central banks.
Already in 2017, he spoke out against Bitcoin, with a tweet on November 27th that left no room for misunderstanding:
“Bitcoin is money laundering tool for criminals/tax cheaters that has been transformed in the biggest Ponzi Scheme of all time with value of $160bn (ex Madiff) and I am amazed not a single regulator takes action. Just unbelievable”.
Years and interest in Bitcoin from leading figures in business and finance have not changed his opinion.