Shark Tank investor Kevin O'Leary speaks with Yahoo Finance Live about the FTX collapse, his exposure to the meltdown, his stance on Sam Bankman-Fried, and whether he plans to continue to invest in crypto.
- As we take a look at crypto assets this morning. Bitcoin, yeah, that's currently up just a little bit. And you're seeing Ether, FTX Token, Binance, Solana also higher as of right now. But this is all as the fallout from the collapse of FTX continues. And since crypto lender BlockFi filed for chapter 11 bankruptcy protection last week, the company and the question now that many are asking is, how widespread could the contagion be?
High profile interviews by embattled founder and former CEO of FTX, Sam Bankman-Fried have furthered the debate on whether he knowingly commingled funds. He says he didn't. And that seems to be a view supported by our next guest. We're joined now by Mr. Wonderful himself, Kevin O'Leary.
Kevin is the chairman of O'Leary Ventures, but you'll know him better as the co-host of Shark Tank. Kevin also an investor in FTX, as well as the spokesperson for the exchange. Kevin, it's always a pleasure to grab some of your time here. Help us make sense of all this first and foremost.
When you think about what has taken place with FTX, and what we've heard from Sam Bankman-Fried to this point, do you believe that he committed fraud or misled over that time?
KEVIN O'LEARY: The answer is I don't know yet. And I've said that from the beginning. The point is, we don't have any facts. We have a lot of hysteria. We have an angry mob crowd. We have a lot of conjecture. We have a whole lot of stipulations that no one can basically-- has any basis to make claims on.
And my problem and the way I'd like to deal with it, and the way I'm going to deal with it, is look. For full disclosure, I'm a shareholder in FTX International, a shareholder in FTX US. And I have corporate accounts on the FTX platform. Here's how I'm going to deal with this.
I want full transparency of every transaction in my account, which has been swept clean. Millions of dollars are missing. There is no accounting records there. There's no conversion records there's, nothing. Now, when this occurred was middle of Saturday afternoon two weeks ago when the company filed for bankruptcy in 101 locations plus.
And so, somebody is controlling that server. And for the sake of all of us as institutional investors, who require this data for our taxes, for compliance, for our accounting, for reconciliation, we need the servers turned back on so we can see this information. I'm not saying open the exchange or operate it. I don't care about that.
What I care about is being able to forensically audit every single transaction that occurred in my account. And then we'll have the answer of who did what and where and when. Because one of the remarkable situations about this financial collapse-- different to Enron, different than Lehman Brothers, different to Bear Stearns-- is that 90 plus of these transactions are on chain.
They are irrevocable. They cannot be changed. They're on the public record forever, probably on AWS servers right now, in addition to every dollar wired into those accounts, whether they be Swift or Fed wires or ACH transfers. That's all reconcilable. So by the time this is over, and you ask me what Sam Bankman-Fried did, we'll know.
It'll be totally, totally transparent. And until then, I'm not joining the herd. I'm just waiting for the facts. That's what I'm doing.
- Kevin, thank you so much for being here. I wanted to get to something that I think a lot of people have been wondering about, and maybe even taken a bit aback by. After that interview at DealBook last week, you posted a tweet from Bill Ackman essentially agreeing that you believe SBF when he says-- when he says that he didn't knowingly commit any wrongdoing. I guess I wonder what has you still coming to his defense when you've lost millions of dollars on this investment, and when so many people have lost money here?
KEVIN O'LEARY: Because I am of the ilk and of the group of people that says, you're innocent until proven guilty. That's what I believe. And I want the facts. And so, if you tell me that you didn't-- you did or didn't do something, I'm going to believe you until I find out it's a falsehood.
What we have now is everybody on Earth raging against this guy, Sam Bankman-Fried, saying he's a fraudster. He stole the money. He took it to his own account. It's hidden somewhere. How does anybody know that if we have no way to audit it? How can anybody make that claim? Are they not as baseless as what Sam Bankman-Fried is saying until we have the facts? That's all I'm saying. And I think Ackman is in the same camp.
I want the facts. That's all. I don't think that's asking too much. And frankly, I can't retrieve my money until I know where it is. And that's the first thing I need to know. I need to know where was my money transferred to? It's alleged it went to the Bahamian government, alleged it went to the US, alleged it was stolen in a hack.
I don't know any of that yet. And I want to know where it is because I've told all of my lawyers, keep your phasers on stun until we have facts. Then we're going to get that money back. That's exactly what's going to happen. I'm not the only institution in this situation. We all want our recovery path. We need a recovery path, but we don't have one.
- Kevin, yeah, there is a lot still to be explored here. But what would you say to the people who are not seeing their money right now, the people who have invested their savings into this company who now don't know where that money is?
KEVIN O'LEARY: I'm one of them. That's exactly what happened to me. And I intend to fix it. I'm going to go after that money. I want it back. I have the resources to do it. I'm very fortunate, I have millions of followers. I'm going to take them on the journey. I'm going to get the money back. That's what's going to happen.
And where the chips fall, I have no idea. Who's going to jail? I have no idea. Who was fraudulent? I have no idea, but I will find out, I can tell you that. Because this is 100% auditable, 100%. I don't care if it takes three, four, five, six, seven years. Doesn't matter to me. You can't take my money and expect me to do nothing.
I go after it, just as other institutions will do the same thing. Every lawyer and his dog is going after this thing right now trying to figure out what happened, but we don't know anything yet. So why don't we just get the facts first.
And if Sam Bankman-Fried can shine light on the facts-- because from what I understand, he's been kicked out of the company. He has no access to even his emails. He has no information past the moment the company went into chapter 11. So he's one piece of the puzzle.
But we also have to talk to those that are going to go through the bankruptcy process. And that's the same team that did Enron. And what I want from them is total transparency on everything, including I want access to my account and all the information there. And we have regulators all around the world pursuing that same information.
Before this is over, I'll be able to, in my own team, reconstruct every single transaction that occurred because you can't take it off the blockchain. And I'll have access by the time I finish litigating to every transfer that was a Swift, an ACH, or a Fed wire. That's my assumption.
KEVIN O'LEARY: And that's the only way to do this. It's the only way to do it. And lastly, from the people doing the bankruptcy, I would like total transparency on the fees they're charging. That's my money they're spending, and other institutions' money. I want a website set up that gives us that information. We know who's getting paid, why and when.
As I understand it, $700 million got extracted from shareholders of Enron, or claimstakers of Enron, to bankruptcy proceedings. That seems a little high to me in this case. We have the audit trail of the blockchain.
- Right. Kevin, we've also heard from Elon Musk via Twitter-- because where else-- saying, "SBF was bad at League. 'Nuff said." Somebody else saying that we don't need to hear any more, or there doesn't need to be any more mentioning about SBF except for his court date. Elon Musk then responding, "Let's just give him an adult time out in the big house and move on."
Do you believe that SBF will, at the end of this, serve time for the mishandling? And perhaps, if proven, the fraud as well that's taken place?
KEVIN O'LEARY: I have no idea. The audit will determine it. The transfer of capital that will be dollar by dollar audited, and we will know all of that. And if there was nefarious activity, if he did break the law, or anybody else in there broke the law, they'll face the full force of the law. Because there's a lot of people that are not happy about this. And I'm one of them.
On the other hand, we're in a society that assumes guilt until proven guilty. So I don't know how Elon knows. If I don't know, how does he know? Nobody knows. I've asked every institution, do you have any idea where your capital went? The answer is no. So until we have information, until we have the facts, until we have the audit trail, until we have the conversions out of the account, until the accounts are open for scrutiny, nobody knows anything.
And so, it's all speculation. Now, the story itself is not going to go away. This story is not just a financial collapse. It's a human story. How did this happen? How can some of the largest financial institutions on Earth have got into this deal? We all have egg on our faces. We're all embarrassed. We all feel foolish.
But at the same time, it's not over. We've got to figure out what happened here so that A, we can regulate against this ever happening again. What is the-- we should have regulated this exchange. It's no different than the NASDAQ or the New York Stock Exchange, or any other exchange that's regulated. Put all the safeguards in. And I think that's going to happen.
If there's any silver lining in this story, it has to be that. Regulators have woken up. The Hill has woken up. Washington's woken up. Everybody's talking about this disaster. And we're going to talk about it until we get all the facts. Sam Bankman-Fried is going to be on Twitter every single day for years to come while we unpeel this onion and find out what happened.
- Kevin, while we have you-- and we've got to hustle to our finish here-- but earlier this year, you told me that you were maxed out in crypto investments and representing about 20% of your portfolio at that time. Where does your crypto exposure stand right now?
KEVIN O'LEARY: I have the same positions on. Obviously, it's down significantly because we've had such a correction across all asset classes. And I'm probably sitting right now at about 14 and 1/2. We just marked the market today. We've had to take some big hits like everybody else. We're looking at doing some sell-offs for tax purposes because this year, we will be reporting taxes on all crypto positions as just started last year.
Here's something else to think about that-- and I've had this conversation with countless institutions. There is such a close correlation between 5 different tokens and level one level two chains that you don't need to own 30. You can own 5 or 6 and get the same volatility that the 10,000 tokens give you.
So what's going to happen here over the next 36 months, in my opinion-- and I'm going to remain. This doesn't change anything in terms of what I do in crypto. I'm going to continue to invest. But I obviously have to consider myself a tax-washed selling. So if I sell my Bitcoin here, I've got to wait at least 31 days to reposition myself. And I will do that.
But I don't need to buy 30 positions anymore because it's clear, given what happened, the correlation is so tight. So I predict tremendous pressure on tokens that have no utility, no value, no merit, no use, no app. They're all going to go away. And so, what we're going to get is a much cleaner, much more correlated, a much more productive crypto environment.
And much of it will accrue to the big platforms, Ethereum and Bitcoin. Probably Polygon, which makes Ethereum more efficient. But you really don't need much more than that. And that's what I think you're going to see happen to this sector, a very tight correlation to just a few names. However, if we get regulation, particularly around stablecoins, it will bring a lot more capital into this space and to a lot fewer names.