Warren And O’Leary Battle Over Cryptocurrency Regulation

“Shark Tank” personality and investor Kevin O’Leary tangled with Sen. Elizabeth Warren (D-MA) at a Senate Banking Committee hearing Wednesday over the need for new federal regulations governing the cryptocurrency industry.

O’Leary was a paid spokesman for FTX, the now-bankrupt digital currency brokerage founded by the disgraced Sam Bankman-Fried. The former CEO is currently jailed on fraud charges after the spectacular collapse of his firm.

The company filed for bankruptcy in November as investors discovered that FTX assets were commingled with Bankman-Fried’s other venture, Alameda Research. Multiple investigations target the former CEO, and investors stand to lose billions in the firm’s implosion.

Warren is a fierce critic of big business and Wall Street, and she turned her attention to digital currency.

She directly asked O’Leary if crypto is so alluring that the federal government should accept more lenient regulations against money laundering and weaker compliance than is required of banks.

O’Leary sharply responded that the government should apply the “same regulatory structure” that currently regulates trading of stocks and bonds. The investor noted that the American dollar is used by “bad actors” for drug schemes every day.

Warren shot back that the rules that apply to banks, stockbrokers, and credit card companies concerning money laundering should also apply to crypto assets. O’Leary, however, said the issue could be solved “overnight” if client rules were the same on both sides of the transactions.

As a celebrity ambassador for FTX, O’Leary was paid over $15 million in equity and digital assets. He told senators that he expects to lose the whole compensation package and that he mistakenly fell into “groupthink.”

That did not stop him, however, from defending the industry.

O’Leary related to the committee hearing that FTX’s collapse is “nothing new.” The tanking of an individual brokerage “does not change this industry’s promise,” according to the businessman.

He then listed other failed enterprises, such as Enron and Bear Stearns, that did not alter the long-term outlook of U.S. markets.

The same, he said, should apply to cryptocurrency. Many experts note that the scope of fraud alleged at FTX would have brought down nearly any firm in any industry. O’Leary even noted that he still maintains investments in other digital currency companies.