VC Investors Are Moving on From Crypto, Says Kevin O’Leary

Venture capital money is fleeing crypto as regulators tighten their 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 headed toward artificial intelligence. 

Why Regulators Are Mad

During an interview published 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 fatigued,” said O’Leary. “They’re really tired of gathering every six months when the next crypto company blows up and goes to zero.”

There’s been no shortage of crypto industry blowups in the past 12 months. Following a euphoric 2021, hawkish monetary policy culminated in massive drawdowns for crypto asset prices the following year, resulting in mass layoffs and an avalanche of major corporate bankruptcies. 

Those bankruptcies, arguably kicked off by Terra’s collapse in May, reached a climax when Sam Bankman Fried’s FTX empire fell apart in November, taking BlockFi, Genesis, and others down with it. 

Part of FTX’s collapse shed light on the fallibility of the crypto tokens issued by it and similar firms, such as FTT. “They’re totally unregulated, and they keep issuing tokens that are worthless,” continued O’Leary. 

Given the circumstances, O’Leary is unsurprised by the Securities and Exchange Commission (SEC)’s 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 its BUSD stablecoin issuance days later. 

Is Regulation Good?

While Paxos and others – such as Coinbase – are fighting back against the SEC’s strict enforcement, O’Leary views the crackdown as good for his pocketbook. The investor owns a Canadian crypto exchange called WonderFi, which he believes will benefit these events alongside other regulated firms. 

“You gotta get on board on regulation… you gotta stay out of the way of Gensler at the SEC,” he said. “FTX poked the bear, the bear’s awake, and it’s pissed.”

O’Leary has long advocated in favor of regulation, insisting that firms with longstanding grudges against the SEC, like Grayscale, are wasting time by fighting the agency. 

Certain crypto industry leaders like Kraken CEO Jesse Powell view things differently. By his account, regulators have let “bad guys” expand and blow up within the industry in order to justify crackdowns against good actors in the aftermath. 


Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).

PrimeXBT Special Offer: Use this link to register & enter POTATO50 code to receive up to $7,000 on your deposits.