Kevin O’Leary

FTX poked the bear and the bear is pissed — O’Leary on the crypto crackdown

Kevin O’Leary believes U.S. lawmakers are “fatigued” and “pissed” with the cryptocurrency industry after having to deal with one blowup after another.

Shark Tank investor and venture capitalist Kevin O’Leary has urged crypto exchanges to “get on board with regulation” if they want to “stay out of the way” of Gary Gensler and the United States Securities Exchange Commission.

In a Feb. 20 interview with TraderTV Live, O’Leary said that U.S. lawmakers are “fatigued” over crypto collapses and that they’re only going to get more ruthless if companies continue to not comply:

“You got to get on board with regulation, you got to stay out of the way of Gensler at the SEC and other regulators. Those hombres [men] in Washington are not happy. FTX poked the bear, the bear is awake, and it is pissed.”

“These senators are really fatigued, they’re really tired of gathering every six months when the next crypto company blows up and goes to zero,” he said, adding “because they’re totally unregulated and they keep issuing tokens that are worthless.”

O’Leary said the SEC whacking Kraken for $30 million and ordering them to immediately cease its staking services should put the industry on alert and to comply by all means.

In light of the recent regulatory crackdowns, the Shark Tank investor predicted that regulated trading platforms will be better investments than their unregulated counterparts over the next few years:

”I think the value of regulated exchanges is going to go up over the next few years, while the unregulated ones get put out of business or go to zero by the regulators.”

O’Leary recently confessed to losing basically 100% of the $15 million that FTX paid him to be its official spokesperson.

Related: ‘There will be many more zeros’ — Kevin O’Leary on FTX-like collapses to come

Despite admitting that FTX was a “bad” investment, Mr. Wonderful has continued to defend former FTX CEO Sam Bankman-Fried, claiming that the controversial figure should be treated as innocent until proven guilty and adding that he wouldn’t rule out investing in the failed entrepreneur again:

The Shark Tank investor has previously expressed dislike towards some of the more decentralized, unregulated players in the industry too.

On Aug. 13, O’Leary said Dutch authorities were right to arrest Alexey Pertsev — the creator of Ethereum-based crypto mixer Tornado Cash — because such applications and the “crypto cowboys” that run them “mess with the primal forces of regulation.”

Kevin O’Leary lost the $15M he was paid to be FTX’s spokesperson

Kevin O’Leary fessed up to making a massive mistake with FTX and is working to find out where his money went amid the bankruptcy.

Shark Tank star and investor Kevin O’Leary, known in some circles as Mr. Wonderful, has claimed he has all but lost the $15 million FTX paid him to be its official spokesperson.

Speaking at CNBC’s Squawk Box on Dec. 8, O’Leary outlined that after taxes, agents fees, a $1 equity investment into FTX, and buying a whole lot of crypto that’s now stuck on the FTX exchange, he’s got nothing left to show for his time with FTX:

“Total deal was just under $15 million, […] I put about $9.7 million into crypto. I think that’s what I’ve lost. It’s all at zero, I don’t know cos my account got scraped a couple of weeks ago. All the data, all the coins, everything.”

“It was not a good investment […] I don’t make good investments all the time, luckily I make more good ones than bad ones, but that was a bad one,” he added.

He will probably be just fine without the funds, however, as the 68-year-old is estimated to have a net worth of around $400 million — if such estimates are anything to go by.

Kevin O’Leary on Squawk Box: CNBC

Mr. Wonderful was also questioned on what initially drove him to jump on the FTX bandwagon back in August 2021, given that he previously indicated that he held back from crypto in its early days due to his own rigorous compliance standards.

In response, he essentially fessed up to making a massive error, noting “I obviously know all the institutional investors in this deal, we all look like idiots, let’s put that on the table.”

“We relied on each other’s due diligence but we also relied on another investment theme that I felt drove a lot of interest in FTX. Sam Bankman-Fried is an American, his parents are American compliance lawyers. There were no other American large exchanges to invest in if you wanted to invest in infrastructure plays,” he said.

O’Leary reiterated that he is currently working to find out where his capital on FTX actually went and how he can get it back. He also added that he has “agreed” to testify at the upcoming Senate Committee hearing set for Dec. 14.

Related: Sam Bankman-Fried misses deadline to respond to testimony request, now what?

Despite the whole debacle, O’Leary has previously said he would still have SBF on his team, and in a tweet on Dec.8, he reiterated that he is not scared off investing in entrepreneurs that have massive failures as “failure is often the best teacher.”

During another interview with Yahoo Finance on Dec. 6, O’Leary stated that SBF should be treated as innocent until proven guilty, as he called for FTX to be audited in the wake of its collapse.

“I am of the ilk and of the group of people that says, ‘You’re innocent until proven guilty.’ That’s what I believe. And I want the facts. And so, if you tell me that you didn’t — you did or didn’t do something, I’m going to believe you until I find out it’s a falsehood,” he said.

Kevin O’Leary defends SBF, says FTX should be audited

O’Leary said that the truth about FTX can be discovered thanks to the unique nature of blockchain technology.

In an interview with Yahoo Finance on Dec. 6, Shark Tank’s Kevin O’Leary called for calm in the wake of FTX’s collapse. The exchange’s former CEO, Sam “SBF” Bankman-Fried, should be understood as innocent unless evidence comes to light that shows he has committed fraud, O’Leary stated.

O’Leary called for FTX to be audited to reveal where the exchange’s money went so that investors can get their funds back.

On Nov. 30 and Dec. 1, SBF took several interviews in which he claimed he was not guilty of fraud, which led to backlash within the crypto community. But O’Leary defended SBF in this new interview, saying he is “innocent until proven guilty.” He explained:

“I am of the ilk and of the group of people that says, ‘You’re innocent until proven guilty.’ That’s what I believe. And I want the facts. And so, if you tell me that you didn’t — you did or didn’t do something, I’m going to believe you until I find out it’s a falsehood.”

O’Leary stated that because of blockchain technology, all of the exchange’s transactions “are 100% auditable”; and that once this audit is performed, the truth about FTX will come out. Then, if anyone broke the law, they’ll be prosecuted.

He argued that investors will be able to get back at least some of their money if an audit is performed.

“We’re going to get that money back,” he said. “That’s exactly what’s going to happen. I’m not the only institution in this situation. We all want our recovery path. We need a recovery path, but we don’t have one.”

Before its bankruptcy, FTX was the second-largest crypto exchange in the world by volume. But from Nov. 2 to 11, a series of events led to it being unable to process withdrawals. It subsequently filed for bankruptcy, and billions of dollars of investors’ capital are now tied up in these bankruptcy proceedings. Bankruptcy filings show that the company may have over 1 million creditors, of which Kevin O’Leary is one.

US lawmaker blames ‘billionaire crypto bros’ for delayed legislation

The collapse of FTX has raised alarm bells across Washington, D.C.

United States congressman Brad Sherman, a known crypto skeptic, has pointed the finger at “billionaire crypto bros” for slowing down much-needed cryptocurrency regulation. 

In a Nov. 13 statement addressing the collapse of crypto exchange FTX, Sherman said the exchange’s implosion has demonstrated the need for regulators to take immediate and aggressive action:

“The sudden collapse this week of one of the largest cryptocurrency firms in the world has been a dramatic demonstration of both the inherent risks of digital assets and the critical weaknesses in the industry that has grown up around them.”

“For years I have advocated for Congress and federal regulators to take an aggressive approach in confronting the many threats to our society posed by cryptocurrencies,” he added.

Sherman announced his plans to work with his Congress colleagues to examine options for federal legislation, which he hopes can be carried out without the financial influence of members in the cryptocurrency industry:

“To date, efforts by billionaire crypto bros to deter meaningful legislation by flooding Washington with millions of dollars in campaign contributions and lobbying spending have been effective.”

“I believe it is important now more than ever that the SEC take decisive action to put an end to the regulatory gray area in which the crypto industry has operated,” the senator added.

While Sherman made a direct reference to former FTX CEO Sam Bankman-Fried and political donations to the Democratic Party, he also mentioned Ryan Salame, the co-CEO of FTX, who donated to Republicans in 2022.

Bankman-Fried was also reported to have donated $39.8 million into the recent 2022 U.S. midterm election, which he said was distributed to both the Democratic and Republican parties. The nearly $40 million figure made him the sixth largest contributor.

While Sherman has advocated for an “aggressive approach” to crypto regulation, Thomas Hook, a Professor on Cryptocurrency Regulation at Boston University School of Law recently told Cointelegraph that regulators should be looking to implement “common sense regulation:”

“[Regulators] are reacting to an industry that is evolving constantly but overregulation could stifle that innovation […] poorly thought-out regulation could create a two-fold issue: first it could limit US consumers’ ability to participate in the cryptocurrency ecosystem and it could also drive these businesses to less regulated jurisdictions.”

“This actually creates more risk for customers as it puts them in a position of dealing with less regulated institutions to participate in the ecosystem,” he added.

His comments, however, were made before the collapse of the FTX crypto exchange. Cointelegraph has reached out to Hook to understand if his position has changed in light of the new events.

Related: US senators commit to advancing crypto bill despite FTX collapse

Meanwhile, Shark Tank host and millionaire venture capitalist Kevin O’Leary stated in a Nov. 11 interview with CNBC that U.S. regulators “need to start with one thing” rather than regulating everything at once — with the investor recommending Congress start with the Stablecoin Transparency Act.

O’Leary said that given the recent events at FTX, he believes institutional investors will likely put a pause on deploying “serious capital” into new investments until a legitimate regulatory framework is set in place:

“That would signal to everybody around the world that regulators in the United States are taking crypto on, starting to put rules in place, putting the guard rails on, no one is going to play ball in this space on an institutional level with serious capital until we get it done.”

Among the most notable cryptocurrency bills to have been introduced into U.S. Congress include the Central Bank Digital Currency Study Act of 2021, the Digital Commodities Consumer Protection Act of 2022 (DCCPA), the Stablecoin Transparency Act and the Cryptocurrency Tax Clarity Act.

Future bills will center around President Joe Biden’s executive order in March 2022 — which will include bills aimed at improving consumer and investor protection, promoting financial stability, countering illicit finance and improving the United States’ standing in the global financial system, financial inclusion and responsible innovation.

Kevin O’Leary says sacrificing Tornado Cash worth it for institutional adoption

Mr. Wonderful thinks that crypto needs more regulation and less “crypto cowboys” like Tornado Cash creator Alexey Pertsev, who he suggested was a necessary sacrifice to create stability for institutional inflows.

Clamping down on crypto applications that “mess with the primal forces of regulation” is necessary, says Shark Tank host and millionaire venture capitalist Kevin O’Leary, who argued that Tornado Cash and similar services are preventing real institutional capital from coming into the space.

In a discussion on Crypto Banter on Saturday, O’Leary, also known as Mr. Wonderful, suggested that applications like Ethereum-based crypto mixer Tornado Cash are a part of a “crypto cowboy” culture that shouldn’t have a place in the industry.

Instead, O’Leary is of the view that crypto needs a “rules-based environment” in order to attract real institutional capital into the digital-asset industry, and much of that regulation needs to stamp out protocols like Tornado Cash, which enables users to conduct anonymous transactions and therefore potentially engage in criminal activity.

In the discussion, O’Leary didn’t back down on his opinion regarding the arrest of the Tornado Cash creator Alexey Pertsev, stating:

“At the end of the day, it’s okay to arrest that guy. Why? He’s messing with the primal forces of regulation […] If we have to sacrifice him, that’s okay, because we want to have some stability in that institutional capital.”

The venture capitalist said that while institutional interest in the digital-assets sector continues to increase, “they’re not going to touch it while crypto cowboys are riding the fence.” O’Leary emphasized that “until we get rid of this crap,” there will be no “stability in […] institutional capital,” but he believes that the industry is slowly but surely weeding out the “cowboys:”

“I think we’re getting to that stage now. Maybe we’re in the third or fourth inning towards that, but I’m tired of this crypto cowboy crap. I want to get involved in a regulated place where we can bring billions of dollars to work. I don’t need to be a crypto cowboy, and I don’t want to be one because I work in the regulated world.”

But, O’Leary’s opinion flies in the face of the sentiment of many in the space. The United States government’s sanctioning of the Ethereum-based privacy tool last week enraged many influential crypto figures who defended the need for basic privacy rights on decentralized networks.

Gnosis co-founder Stefan George was one of those who defended Tornado Cash, stating that the protocol brings “much-needed privacy” to Ethereum and that writing open-source software should be recognized as “an expression of free speech.”

Chainlink Lead Developer Advocate Patrick Collins also said that the decision to remove Tornado Cash’s GitHub account is “much worse than sanctioning a website,” as code is speech and, by doing so, the U.S. Treasury is violating the first amendment of the U.S. Constitution.

Ethereum educator Anthony Sassano shared in a Tweet to his 218,000 followers that he was temporarily banned from decentralized finance (DeFi) lending protocol Aave after his address was blacklisted for recieving 0.1 Ether (ETH) from an anonymous person via Tornado Cash. Sassano went on to note that the “main conclusion I have come to from recent events is that Ethereum is more of a concern to governments/nation states than Bitcoin.”

Related: Tornado Cash co-founder reports being kicked off GitHub as industry reacts to sanctions

Last week, Dutch financial crime authority the Fiscal Information and Investigation Service (FIOD), arrested a 29-year-old Tornado Cash developer who was suspected to be involved in money laundering via the protocol.

According to a Dutch regulatory body, over $7 billion have flowed through Tornado Cash’s smart contracts since its inception in 2019. The sanctions from the U.S. Treasury came after more claims that the protocol had increasingly been used for money laundering activities.

Crypto markets need to hit ‘total panic’ before revival: Kevin O’Leary

The millionaire investor thinks that the market bottom will be marked by “total panic,” at which point weak companies with “idiot managers” will be weeded out and the industry can continue to grow.

Millionaire investor from the Shark Tank TV show Kevin O’Leary says there’s going to be “total panic” and “massive volatility” in the crypto markets ahead before the industry swings back toward stronger firms and clearer regulations.

Despite the recent fall of crypto finance firms including Voyager Digital and Celsius, O’Leary told Cointelegraph on July 13 that we’re still missing a “real big event” seen in previous market cycles before we go back to accelerated growth in the space, stating: 

“This passion play gets played out over and over again.”

Some investors have pointed to the current market conditions as a result of over-leveraged centralized finance firms such as Voyager and Celsius. O’Leary said the problems with firms like those come from “idiot managers” who needed to be weeded out to make the industry more viable.

“It’s unfortunate that these companies have gone to zero but you end up with much stronger species.”

Ben Samaroo, CEO of crypto investment support firm WonderFi Technologies who was also present during the interview with Cointelegraph said the recent bankruptcies are part of the “second wave of crypto crises” in Canada’s history.

Samaroo explained that the first “crypto crisis” in Canada was characterized by the fall of now-defunct crypto exchange QuadrigaCX in 2019, which saw $145 million in user funds go missing after the sudden death of its founder Gerry Cotten. 

The WonderFi CEO believes that this second wave of crypto crises will have regulators focusing on crypto earn products like those from Voyager Digital.

“Canadian regulators are looking at anyone in Canada offering earn products to figure out what it means. They’re looking through the rubble of the collapse to layer in restrictions.”

The duo suggested that stablecoin regulation will be another major hurdle facing the industry. O’Leary stated unequivocally that “we need more stablecoins, as many as there are commodities,” but that they must keep their peg.

Related: Celsius vows to return from bankruptcy but expert fears repeat of Mt Gox

Although he said that what happened with the destruction of the Terra ecosystem in May with the depegging of Terra USD (UST) was “good,” others cannot go down the same path if they wish to exist. He added that Tether (USDT) may experience more trouble after it wobbled on its peg and fell to $0.95 in May.

“Tether breaking peg is going to be a big problem for regulators as they look at what stables are acceptable for platforms for use.”

For now, USD Coin (USDC) is the preferred stablecoin on Bitbuy and Coinberry. However, Samaroo noted that the exchanges could list other stablecoins as long as it doesn’t subject users to a “catastrophic event from a stablecoin that isn’t all that stable.”

O’Leary and Samaroo appear to have their sights set on the long-term growth of the industry, however, with WonderFi recently listing on the Toronto Stock Exchange on June 20 and completing a $38.4 million acquisition of Canadian crypto exchange Coinberry on July 4. It now owns Bitbuy and Coinberry in Canada.