Unregulated cryptocurrency exchanges will continue to fall like dominoes after FTX, with more “crashes” to come, warns Shark Tank Star and investor Kevin O’Leary.
A former spokesperson and supporter of the now bankrupt FTX exchange told Kitco broadcaster David Lane in an interview Jan. 17 that FTX was just one in a long line of “disregulated exchanges” likely to fail:
“If you are asking me if there will be another collapse to zero? Absolutely. One hundred percent it will happen, and it will continue to happen over and over again.”
Unregulated exchanges are those that are not subject to regular scrutiny, are not registered and regulated by the Securities Commission, and do not operate under similar rules to traditional stock exchanges and brokerages.
Well, all of these exchanges, all of the unregulated exchanges are seeing massive outflows right now. The smart money got the joke. They saw what happened at FTX and didn’t sit down for an explanation.
Kevin O’Leary (right) tells David Lane that there will be more crypto crashes. Source: YouTube
Then the Shark Tank star issued a stark warning to so-called “unregulated” crypto exchanges.
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“If you’re not willing to be audited, […] you don’t have an audit, you don’t want to be transparent, you don’t want to disclose ownership, why should institutional capital remain? Of course, it won’t.”
The collapse of FTX in November sparked fierce calls from the community for more transparency from cryptocurrency exchanges. Within weeks, five centralized exchanges had completed Proof of Reserve audits, while other plans to do the same were announced.
However, some observers, including a senior official from the US Securities and Exchange Commission, cautioned that the proof of reserves does not paint a true picture of the company’s financial position, and asked investors to be “extremely wary” of claims made.
Some validators, like Mazars, appear to have flipped their support of crypto companies. In December, the company removed its audit of cryptocurrency exchange Binance, and reportedly stopped conducting Proof of Reserve audits of crypto companies altogether.
Other audit firms such as FTX Armanino auditor have also reportedly stopped working with crypto exchanges such as OKX and Gate.io. O’Leary commented:
“Honestly, you know, it’s very hard to find a validator willing to touch this stuff right now because of the disorganized cowboy environment. It’s all going to work out and yes, there will be more zeroes.”
Earlier this month, Mark Cuban, fellow Shark Tank host O’Leary, told The Street Journal that cryptocurrency trading on centralized exchanges would be the cause of the next crypto “implosion.”
Up to 70% of trading volume on unregulated exchanges is laundered trading, according to a December report from the National Bureau of Economic Research.
Related: Binance “Putting FTX Out of Business” – Kevin O’Leary
Despite the noise, O’Leary says he’s doubling down on his investments in crypto, particularly in Bitcoin
BTC
cursors down
$21,233
.
“I’ve been back in the crypto markets lately. Anytime bitcoin drops below $17,000, I add it to our positions there.”
“Cryptocurrency is becoming very interesting because we’re finally starting to see bearer regulation come into play and I think that’s a good thing in the long run,” he added.
