More crypto companies are going to fall to Ponzi scheme-style bankruptcy, but cryptocurrency will remain a crucial tool for exchange funds globally, a venture capitalist said Sunday.
“Overall, I think you’re going to have most things crash,” said Joe Lonsdale, an investor and a co-founder of software company Palantir. 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,” Lonsdale said.
Read more: ‘Bitcoin could crash 40pc to $10,000 in 2023’
FTX, a Bahamas-based crypto exchange, filed for Chapter 11 bankruptcy in early November after reportedly losing at least $1 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,” 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.”
