Kevin O’Leary and Elizabeth Warren Clash Over Crypto Regulation

On Wednesday, celebrity investor Kevin O’Leary and Sen. Elizabeth Warren (D-MA) had a spat during the Senate Banking Committee hearing about cryptocurrency regulations following the collapse of the digital asset exchange FTX.

A month ago, FTX filed for bankruptcy after users learned that the venture’s assets were mixed with sister company Alameda Research. Assets and Alameda Research were both run by Sam Bankman-Fried, who was arrested this week at his luxury apartment in the Bahamas and charged with fraud.

Warren, a longtime skeptic of cryptocurrency, said criminals and terror sponsors used the tokens to launder money. She asked O’Leary if “the potential benefits of crypto are so promising that we should accept weaker anti-money laundering rules and weaker compliance from crypto firms than we require from banks,” but he resisted.

“No, I think we should apply the same regulatory structure that we apply to existing trading of stocks and bonds. An exchange is tied to broker-dealers,” he replied. “That is not complicated; it’s already been implemented in other countries. And so and I take issue, senator, with your concept that it makes it easier to do money laundering. Currencies have been used for drug trafficking schemes since the sixties, and the American dollar when it was thrown out of a Piper aircraft in a duffel bag. The American dollar is also used by bad actors all the time.”

Warren stressed that the same rules against money laundering should apply to crypto as they do to banks, stockbrokers, and credit card companies. Money laundering can be solved “overnight” by knowing client rules on both sides of a transaction and using regulated crypto such as USDC.

O’Leary received more than $15 million in equity and digital assets for serving as a celebrity brand ambassador for FTX; he complained recently of giving in to “groupthink.” Even though he believes the industry has upside potential, he expects to lose the entire compensation package.

As the company became increasingly strapped for cash, Bankman-Fried hired O’Leary and other celebrities to promote the company’s products. The disgraced CEO recruited several cultural icons, including Tom Brady, to serve as brand ambassadors. Several influencers are now defendants in a lawsuit alleging they took part in a “fraudulent scheme” to fool unsophisticated investors.