Yahoo Finance Shark Tank's Kevin O'Leary explains how he's betting on crypto in a post-FTX landscape - and why unregulated exchanges will get 'sued into oblivion'
Shark Tank star Kevin O'Leary told Insider why he's still involved in crypto even after the collapse of FTX.
Unregulated exchanges will get "sued into oblivion" by their own regulators, he said.
On Monday, O'Leary-backed WonderFi announced a merger with two other Canadian crypto exchanges, Coinsquare and CoinSmart.
"Shark Tank" star Kevin O'Leary is still investing in the cryptocurrency sector, even after the fall of Sam Bankman Fried's FTX, for which O'Leary was a paid spokesperson.
The FTX collapse — which some dubbed crypto's Lehman moment — rattled confidence in the sector, but O'Leary's view on the asset class remains the same.
Confidence comes from asset performance, O'Leary said, and bitcoin has been his top-performing holding to start the year, alongside the tokens Polygon and Matic. Bitcoin was up a massive 70% in the first quarter alongside other speculative assets as traders bet the Federal Reserve was about to pivot away from tightening monetary policy.
What has changed, however, is his stance on where he stores his assets.
In November, O'Leary said that FTX's implosion convinced him to move all his assets to Canada, and that he would no longer keep funds in unregulated exchanges.
He reiterated that point in a Monday interview with Insider, shortly after crypto firm WonderFi, which O'Leary has backed as an investor, announced a merger with two other Canadian exchanges, Coinsquare and CoinSmart.
Together, the companies have formed the largest regulated digital asset trading platform in Canada. WonderFi surged 31% to trade at $0.21 per share on the news.
WonderFi's regulatory backing, he noted, gives him more confidence that it can keep assets and users safe and compliant.
According to O'Leary, recent regulatory action again Binance and Coinbase are a sign of what's to come, and the response from policymakers shortly after the FTX fiasco was a clue that the space would soon come under more scrutiny.
"Talking to the senators after the hearings [in December], I realized the frustration they had," O'Leary told Insider. "They were really pissed off, and they have released the hounds. They told regulators 'go get them,' and all of a sudden we have a mountain of enforcement action."
Pioneering founders in the nascent crypto sector, the O'Leary Ventures chairman said, have never had to operate under the burden of compliance costs and rules, which suggests those early adopters will see more pain as governments crack down on crypto.
"They don't know how to make money in a regulated environment," O'Leary said.
Companies inventing their own tokens — as FTX did with its native FTT coin — isn't going to work anymore unless the exchange is a "rogue working in the shadows," he explained. That strategy may have been profitable before, but now regulators aren't going to provide the same leeway as before.
"I think they'll all be sued into oblivion by their own regulators. These rockstar crypto guys, they're not going to make it. I bet if you looked at who's managing these companies 36 months from now, all the current guys are gone."
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