Most crypto companies will ‘crash’ after years of industrial Ponzi schemes: Palantir co-founder
More crypto companies will fail Ponzi scheme style bankruptcybut cryptocurrency will remain a key tool for exchanging funds globally, the venture capitalist told Fox News.
“In general, I think most things will collapse,” said Joe Lonsdale, an investor and co-founder of the software company Palantir. Various crypto lenders, crypto tokens and other parts of the ecosystem were “a Ponzi scheme and made no sense.”
“That’s what you would expect in any situation where you have things that are not regulated,” he added.
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Over the past few 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,” Lonsdale said.
FTX founder Sam Bankman-Fried faces multiple legal ramifications for his involvement in FTX’s collapse.
(Jeenah Moon/Bloomberg via Getty Images)
FTX, a Bahamas-based crypto exchange, filed for Chapter 11 bankruptcy in early November after reportedly losing at least $1 billion.
Another major crypto company, BlockFi, too declared bankruptcy last week, following other crypto companies like Celsius Network and Voyager Digital into Chapter 11 proceedings.
Some companies that have declared bankruptcy “had a lot of corruption,” Lonsdale said, though he only named FTX. “Long-term, there’s a good chunk of crypto, but most of what we’ve seen in crypto over the last three, four, five years has been a speculative bubble driven by cheap money and driven by a lot of these Ponzi schemes.”
Joe Lonsdale, co-founder of Palantir, believes that crypto still has a strong future, despite the industry facing a series of company bankruptcies.
(Fox News Digital/Jon Michael Raasch)
Despite the recent upheavals in cryptocurrency markets, crypto-based technologies will continue to develop more capabilities, according to Lonsdale. The blockchain technology used in cryptocurrencies allows funds to be transferred online without using traditional government or banking infrastructure, enabling a new and important way to move money globally, Lonsdale said.
“It makes sense to have more decentralized power and to have something like bitcoin,” he said. “It helped people get money from Russiaout of Venezuela, out of China.”
“It allows more freedom for the financial system from really bad governments,” Lonsdale continued.
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Blockchain technology will still be an important part of the future, the venture capitalist said.
“This ecosystem, in the long run, I think some of these things will become beneficial to the world,” he said. “But that’s not all we’re seeing right now.”
To watch the full interview with Joe Lonsdale on the future of crypto, click here.
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