[DigitalToday reporter Yoonseo Lee] Economist Peter Schiff urged the U.S. Securities and Exchange Commission to investigate STRC, Michael Saylor's new Bitcoin (BTC) investment vehicle.

On May 12 (local time), blockchain outlet BeInCrypto reported that Schiff said STRC is promoted as a stable product suitable for retirees, but is in fact a risky structure tied to Strategy's Bitcoin holdings.

In a post on social media, he called STRC "a typical centralized Ponzi run by Strategy". He also said criticism of Bitcoin should be separated from criticism of STRC. After Saylor took Schiff's objections as hostility toward the broader crypto industry, Schiff raised the intensity of his attack, saying STRC was a separate issue.

The dispute centres on STRC's return structure. Schiff said STRC's dividend-like distributions depend not on business profits or operating cash flow but on inflows of new money. He said the structure operates without an independent earnings base and cannot meet what Saylor describes as asset preservation or stable income provision.

The controversy also spread to Saylor's marketing language. Saylor has introduced STRC as a security suited to stable income based on controllable distributions. In particular, he has made comments to the effect that it is also suitable for retirees who do not want to risk losing principal and who prioritise low-risk wealth preservation and income.

Schiff said such language could run afoul of SEC marketing rules. He criticised how the SEC could allow Saylor's public comments and said it was problematic to describe STRC as suitable for retirees who do not want to risk losing principal. Schiff pointed to volatility stemming from Strategy's large Bitcoin holdings as a core risk of STRC.

He has previously criticised Strategy stock as a fraud. This time he expanded his attack by taking issue with the preferred share programme as well. Schiff said STRC is packaged like a fixed-income product but is closer to a leveraged vehicle for Bitcoin exposure. He said it structurally depends on the Bitcoin price rather than stable cash flow.

The dispute is spreading to companies broadly that tout Bitcoin treasury strategies. Strategy has recently slowed the pace of its Bitcoin purchases, and rival operators such as Capital B of Adam Back are also moving to raise funds for Bitcoin treasury management.

Strategy is seen as the company holding the most Bitcoin. As a result, any regulatory judgement on STRC may not be limited to Strategy. The possibility has been raised that the fallout could spread across the broader approach of providing Bitcoin exposure through preferred shares or similar securities.

Schiff also signalled he would keep raising the issue until the SEC responds. The controversy is widening into a regulatory issue over what risks income-generating securities offered by Bitcoin-holding companies actually contain, and how clearly those risks are being communicated to investors.

How can the SEC let @Saylor get away with public comments that $STRC is suitable for retirees whose primary investment objectives are low-risk wealth preservation and income, and who don't want to risk losing principal? This is a violation of SEC antifraud and marketing rules.