VC investors are moving on from crypto, says Kevin O’Leary
Venture capital money is fleeing crypto as regulators tighten the noose around the industry in a post-FTX crackdown, according to Shark Tank star Kevin O’Leary.
The investor claimed on Monday that VC funding is now moving towards artificial intelligence.
Why regulators are crazy
Under one interview posted on Twitter, O’Leary described his experience attending various Capitol Hill hearings related to FTX’s collapse and interacting with the politicians involved.
“These senators — they’re tired,” O’Leary said. “They’re really tired of coming together every six months when the next crypto company blows up and goes to zero.”
There has been no shortage of explosions in the crypto industry over the past 12 months. After a euphoric 2021, hawkish monetary policy culminated in massive moves for crypto-asset prices the following year, resulting in mass layoffs and an avalanche of major corporate bankruptcies.
Those bankruptcies, arguably started by Terra’s collapse in May, reached a climax when Sam Bankman Fried’s FTX empire fell apart in November, taking BlockFi, Genesisand others down with it.
Part of FTX’s collapse sheds light on the fallibility of the crypto tokens issued by it and similar firms, such as FTT. “They are totally unregulated and they continue to issue tokens that are worthless,” O’Leary continued.
Given the circumstances, O’Leary is not surprised by the Securities and Exchange Commission’s (SEC) hostility toward crypto in recent weeks. The agency fined Kraken $40 million earlier this month for failing to register its staking service while issuing a Wells notice against Paxos for the issuance of the BUSD stablecoin days later.
Is regulation good?
While Paxos and others – such as Coin base — fighting back against the SEC’s strict enforcement, O’Leary sees the action as good for his wallet. The investor owns a Canadian crypto exchange called WonderFiwhich he believes will benefit these events along with other regulated firms.
“You’ve got to get on board on regulation … you’ve got to stay away from Gensler at the SEC,” he said. “FTX poked the bear, the bear is awake, and it’s pissed off.”
O’Leary has long argued for in favor of regulation, insisting that firms with longstanding grudges against the SEC, such as Grayscale, are wasting time fighting the agency.
Certain crypto industry leaders like Kraken CEO Jesse Powell see things differently. Of his accountingregulators have allowed “bad guys” to expand and explode in the industry to justify attacks on good actors afterwards.
