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Kevin O’Leary Claims VC Investors Are Moving On From Crypto

Investors are less likely to put money into crypto now that the SEC is regulating “by enforcement.”

Kevin O’Leary, from the TV show Shark Tank, says that venture capital money is leaving crypto as regulators tighten their grip on the industry after the FTX scandal.

On Monday, the investor said that VC money is now going toward artificial intelligence.

Why regulators are upset?

In an interview that was posted on Twitter, O’Leary talked about going to hearings on Capitol Hill about the collapse of FTX and talking to the politicians there.

“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.”

In the last 12 months, there have been a lot of blowups in the crypto industry. After 2021 was a happy year, hawkish monetary policy led to huge drops in prices of crypto assets the following year. This caused a lot of people to lose their jobs and a lot of big companies to go bankrupt.

These bankruptcies, which may have started with Terra’s failure in May, reached their peak when Sam Bankman Fried’s FTX empire fell apart in November, taking BlockFi, Genesis, and others with it.

Part of FTX’s failure showed how risky the crypto tokens it and other companies like FTT gave out were. “They have no rules at all, and they keep giving out tokens that are worthless,” O’Leary said.

O’Leary is not surprised that the SEC has been hostile toward crypto in recent weeks, given the situation. This month, the agency fined Kraken $40 million for not registering its staking service. A few days later, it gave Paxos a Wells notice for issuing BUSD stablecoins.

Is regulation beneficial?

Even though Paxos and other companies, like Coinbase, are fighting back against the SEC’s strict enforcement, O’Leary thinks the crackdown is good for his wallet. The investor owns a Canadian cryptocurrency exchange called WonderFi. He thinks that it and other regulated firms will benefit from these events.

“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 always been in favor of regulation. He says that companies like Grayscale that have long-standing grudge against SEC are wasting their time by fighting the agency.

Some people in the crypto industry, like Jesse Powell, CEO of Kraken, see things differently. He says that regulators have let “bad guys” grow and blow up in industry so that they can justify cracking down on “good guys” afterward.

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