Right present, all unregulated markets are experiencing “huge outflows,” according to the Shark Tank star.
Following FX, unregulated crypto exchanges will fall like dominoes, with plenty more “meltdowns” to come, predicts Shark Tank personality and investor Kevin O’Leary.
In a Jan. 17 interview with Kitco anchor David Lin, O’Leary, a former spokesperson and proponent for the now-bankrupt FTX exchange, said the collapse was just one in a long line of “unregulated exchanges” expected to fail:
“If you’re asking me if there’s going to be another meltdown to zero? Absolutely. 100% it’ll happen, and it’ll keep happening over, and over and over again.”
Unregulated exchanges are ones that are not subject to regular auditing, are not registered and regulated by a securities commission, and do not operate according to the same standards as typical stock exchanges and brokerages.
“Well, all of these unregulated markets are experiencing tremendous outflows right now. The wise money has figured out the joke. “They watched what happened at FTX and aren’t waiting for an explanation,” he explained.
The Shark Tank star then issued a strong warning to “unregulated” cryptocurrency exchanges.
“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 stay? Of course, it’s not going to.”
The collapse of FTX in November caused community members to demand greater openness from cryptocurrency exchanges. Five centralised exchanges completed their proof-of-reserve audits within weeks, and several others declared plans to do the same.
However, several observers, including a senior official from the United States Securities and Exchange Commission (SEC), cautioned that evidence of reserves does not provide a complete picture of a company’s financial health and advised investors to be “very sceptical” of the assertions being made.
Some auditors, such as Mazars, appear to have reversed their support for crypto firms. In December, the business pulled its audit for cryptocurrency exchange Binance and apparently stopped performing proof-of-reserve assessments for cryptocurrency companies entirely.
Other auditing firms, including FTX’s auditor Armanino, have reportedly discontinued working with cryptocurrency exchanges such as OKX and Gate.io. O’Leary stated:
“Frankly, you know, it’s very hard to find an auditor that wants to touch this stuff right now because of the unregulated cowboy environment. It’s all going to end and yes, there’ll be many more zeros.”
O’Leary’s Shark Tank co-host Mark Cuban warned The Street earlier this month that crypto wash trading on centralised exchanges will be the source of the next crypto “implosion.”
According to a December research by the National Bureau of Economic Research, wash trading accounts for up to 70% of volume on unregulated exchanges (NBER).
Despite the controversy, O’Leary claims he’s increasing his crypto investments, particularly in Bitcoin.
.“I have been going back into crypto markets lately. Any time Bitcoin drops below $17,000 I add to our positions there.”
“Crypto is becoming really intriguing because we’re finally seeing the bearer of regulation come into play, and I think that’s a good thing in the long run,” he added.