Bitcoin takes a licking

Winklevii ETF nixed

Winkle- vanquished. In a decision that shocked Wall Street, US government regulators on Friday denied the application of Tyler and Cameron Winklevoss for a bitcoin ETF.

The ETF proposed by the brothers — who burst onto the national scene in 2004 when they sued Facebook founder Mark Zuckerberg claiming he ripped off their idea for a social network — would have been an easier way for investors to buy and sell bitcoin.

The SEC’s denial essentially rejects the ETF because there isn’t enough transparency and oversight in the lightly traded Bitcoin market — a view that could doom the two other similar funds that are in the commission’s pipeline.

The SEC “does not accept the premise, suggested by some commenters, that regulation of trading in the [ETF] is a sufficient and acceptable substitute,” the SEC concluded.

The cryptocurrency, which had soared in value by 37 percent this year in anticipation of an SEC approval, plummeted 14 percent in the minutes after the regulatory rejection — from a Friday high of about $1,325 to $1,022.

The decision by the Securities and Exchange Commission to torpedo the Winklevoss Bitcoin Trust exchange- traded fund was based, in part, on concerns that the ETF wasn’t effectively able “to detect and deter manipulative conduct,” Eduardo A. Aleman, an SEC assistant secretary, wrote in the final decision.

“The markets are not mature at the moment,” Marc van der Chijs, managing partner at CrossPacific Capital and a bitcoin investor, told The Post. “The market can be manipulated. I think that’s true. I think they’re right.”

The SEC decision makes it unlikely the twins would have any better luck with a revised application.

The decision could also mean that two pending bitcoin ETFs will have a hard time winning approval.

A representative for Winklevoss Capital, the brothers’ company, didn’t return an email seeking comment.

In comment letters, investors expressed doubts about how much control the Winklevoss brothers would have had over the value of the assets. The brothers would value the bitcoins in the fund based on the price of the Gemini exchange, which they control.

“It’s a very unilaterally controlled process there,” said Josiah Hernandez, chief strategy officer at Bitcoin ATM company Coinsource.

The brothers’ 2004 lawsuit was dramatized in the movie “The Social Network.”

They later settled for about $65 million.