FTX: Palantir co-founder says most crypto companies will ‘crash’

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More cryp­to com­pa­nies are going to fall to Ponzi scheme-style bank­rupt­cy, but cryp­tocur­ren­cy will remain a cru­cial tool for exchange funds glob­al­ly, accord­ing to one ven­ture capitalist.

“Over­all, I think you’re going to have most things crash,” Joe Lons­dale, an investor and a co-founder of soft­ware com­pa­ny Palan­tir, said in an inter­view with Fox News.

Var­i­ous cryp­to lenders, cryp­to tokens and oth­er parts of the ecosys­tem were “a Ponzi scheme, and it made no sense whatsoever”.

“This is what you’d expect in any sit­u­a­tion where you have stuff that’s not reg­u­lat­ed,” he added. 

Over the last sev­er­al years, cryp­to projects have been “val­ued not based on cash flows, not based on cre­at­ing val­ue in the econ­o­my, but based on what peo­ple would pay for it”, Mr Lons­dale said.

FTX, a Bahamas-based cryp­to exchange, filed for Chap­ter 11 bank­rupt­cy in ear­ly Novem­ber after report­ed­ly los­ing at least $US1 billion. 

Anoth­er large cryp­to com­pa­ny, Block­Fi, also announced its bank­rupt­cy last week, fol­low­ing oth­er cryp­to com­pa­nies like Cel­sius Net­work and Voy­ager Dig­i­tal into Chap­ter 11 proceedings. 

Some com­pa­nies that have declared bank­rupt­cy “have had a lot of cor­rup­tion”, Mr Lons­dale said, though he only named FTX. 

“Long term, there’s a good part of cryp­to, but most of what we saw in cryp­to the last three, four, five years was a spec­u­la­tive bub­ble dri­ven by cheap mon­ey and dri­ven by a lot of these Ponzi schemes.”

Despite the recent tur­moil in cryp­tocur­ren­cy mar­kets, cryp­to-based tech­nolo­gies will con­tin­ue devel­op­ing more capa­bil­i­ties, accord­ing to Mr Lonsdale.

Blockchain tech­nol­o­gy used in cryp­tocur­ren­cies allows funds to be trans­ferred online with­out using tra­di­tion­al gov­ern­ment or bank infra­struc­ture, enabling a new and impor­tant way to move mon­ey glob­al­ly, Mr Lons­dale said. 

“It does make sense to have more decen­tralised pow­er and for some­thing like bit­coin to exist,” he said. “It’s helped peo­ple get mon­ey out of Rus­sia, out of Venezuela, out of China.”

“It allows more kind of lib­er­ty for the finan­cial sys­tem from real­ly bad-act­ing gov­ern­ments,” Mr Lons­dale continued. 

Blockchain tech­nol­o­gy will still be an impor­tant part of the future, the ven­ture cap­i­tal­ist said. 

“This ecosys­tem, long term, I think you will have some of this stuff emerge as use­ful for the world,” he said. “But that’s not all we’re see­ing right now.”

This arti­cle orig­i­nal­ly appeared on Fox News and was repro­duced with permission

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