Kevin O'Leary: SEC Lawsuits Make Crypto Radioactive Waste

Canadian businessman, venture capitalist, journalist, and television personality Kevin O'Leary, also known as Mr. Wonderful, didn't earn his nickname without merit. He's been injecting capital into tech companies since the late '80s. O'Leary eventually sold his business, which specialized in educational and entertainment software development, to the global juggernaut Mattel for $4.2 billion. Over the years, O'Leary has diversified his portfolio by investing in gold, commodities, stocks, and crypto. In 2021, he received a stake in FTX as recompense for taking on the role of the company's "representative and ambassador". Following the bankruptcy of SBF's business, he found himself embroiled in one of the class-action lawsuits. Intriguingly, during the FTX hearings, O'Leary alleged that Binance CEO Changpeng Zhao “put FTX out of business”.

Understandably, the events of early June, when the SEC filed two lawsuits against market leaders Binance and Coinbase, deeply resonated with Kevin O'Leary. He explained that he had meticulously scrutinized the regulator's allegations and found Binance's case particularly serious. The allegations involve misuse of client funds and direct accusations against the exchange's founder, who is purportedly personally facilitating unlawful practices within the company.

Simultaneously, O'Leary described the situation with Coinbase, which has been in unproductive negotiations with the SEC for over three years, as "intriguing."

As an institutional investor, O'Leary expressed the urgent need for all parties to reconcile and find common ground. He noted that Gary Gensler, the Chairman of the SEC, has been explicit about his position on treating cryptocurrency as securities. Gensler insists that crypto exchanges adhere to the rules followed by traditional exchanges. Nonetheless, O'Leary acknowledged that Gensler's stance lacks a certain degree of flexibility. 

“Read Gensler's lips, the answer is no no no. And you've got to listen to that. You can't beat them,” the veteran investor firmly stated.

At the same time, O'Leary wryly observed that it seems everyone, except for Coinbase CEO Brian Armstrong, comprehends Gensler's position. Given Coinbase's assertion of being an industry leader, the company has the potential to tackle the existing challenges in the crypto market. However, its performance so far has been less than satisfactory.

In light of the current situation, O'Leary proposed an unexpected resolution to the deadlock. If he were a shareholder or a board member of Coinbase, he would consider a change in the current management. O'Leary was unimpressed with how the CEO handled the situation, especially considering the significant dip in Coinbase's market capitalization following its IPO.

O'Leary also asserts that he recently had discussions with investors and representatives from numerous funds. They all express concern that the crypto sector has been in a state of limbo for a long time. This is the primary deterrent to investment in the industry. If the industry adopted Gensler's regulations, it could significantly speed up its development and provide a considerable boost to its progress, with potential investments reaching into the trillions of dollars.

However, as there is currently no solution, Kevin O'Leary believes investors should look towards other markets, such as Canada, London, Zurich, or Abu Dhabi. In the meantime, some of O'Leary's forecasts are starting to come true. A few days after his interview, news emerged about a preliminary agreement between Binance and the CFTC. Under this agreement, Binance US will restrict access to the assets of its American division for officials from Binance Holdings, including Changpeng Zhao. There is also discussion about the creation of new crypto wallets that Binance will not be able to control.