The CEO of Social Capital and Virgin Galactic believes that token sales are too often built on fraud, and regulators are sure to become interested in them soon.
Chamath Palihapitiya on the All-In podcast warned that the next stage of cleansing by regulators of the industry could soon come, which will affect not only crypto companies, but also venture capital funds using digital assets. Palihapitiya stated that one day lawsuits could be filed against those involved in unscrupulous or illegal distribution of tokens, which will negatively affect a large part of the industry.
“We see a huge number of cases of fraudulent activity from venture capital companies conducting transactions. You invest some capital by buying a token at a crazy low price and you can sell the tokens on the same day. As a result, it becomes pointless to evaluate the value of a token, because as soon as it is sold, the price of tokens drops, and you sell it and leave the market,” explained an experienced venture capitalist.
The billionaire claims that regulators can identify fraudulent infrastructure elements behind the scenes of the project in one day, indicating insider trading.
“If they really want to find bait in the projects, it will not be difficult. After all, how much insider trading takes place between the organizations that manage the exchanges and their affiliates, which the exchanges use to manage liquidity. This is common in the crypto industry,” says Palihapitiya.
Recently, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler called for a unified set of rules for cryptocurrencies that will unite regulators and increase control over the industry. Gesler is confident that participants in the cryptocurrency market are skillfully using loopholes and imperfections in regulatory legislation to their advantage in order to illegally earn money.
Source: Bits
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