Kevin O'Leary: I would fire Coinbase's CEO if he worked for me

the SEC asking a judge late yesterday to freeze all assets on binance's U.S platform after filing a suit accusing the exchange of improperly handling funds and operating as an unregistered broker the sec's actions recently taken against binance and coinbase could transform the U.S crypto Market which is largely largely operated outside regulation pushing them to follow the same rules now as traditional stock and bond exchanges Kevin O'Leary's with us now O'Leary Ventures chairman and um you've talked a lot about crypto in the past right you've had your own challenges I guess when it comes to FTX in the past I think that's an understatement well yes so I I guess I'm being diplomatic but to bring it to today I'm just curious how you're thinking about this these latest developments I take a different view than others perhaps on this I'm actually happy this is happening because from the potential of this asset class it has been stymied it's stuck in the mud if you want to use those words it hasn't gone anywhere for three years because there has been absolutely zero institutional interest and so people ask me why is it that Bitcoin which is probably the best index for crypto valuation is stuck between 25 000 and 30 000 in perpetuity because there's zero institutional interest and so 97 of all the world's wealth in terms of it being invested is done through Sovereign wealth or institutional investors or indexed in the S P 500 or 60 percent of the s p is now ETFs and none of this is carried in crypto you don't find crypto anywhere and so while it's been great to be part of this wonderful nascent community and and cheering on this idea of a rogue nation of crypto trading it's worthless because the asset class is a nothing Burger today and it will remain so until you resolve this issue and so now we go on to this this litigation we've got two major claims here binance is completely different than the claims made against you know coinbase yesterday these are two different situations and they need to be looked at differently but overall I welcome it so are you then long-term still very bullish cryptocurrency as we were talking about even last year and even in this interim period of time during the crypto Ice Age how much has that impacted your own Holdings how much have you lost as a result of this interim Ice Age that we've seen in crypto well some of my losses had to do with FTX sure basically all the whatever you want to allege to that you'll have to go to trial Etc but the asset class itself still has tremendous potential so what I've done is reestablished our positions up to a five percent waiting but I also realize that this point that we're going nowhere we are not going to advance the cause we're not going to get any capital appreciation it's just not going to happen until the very first institution calls me up and says we're going to put a 50 basis point waiting in 100 billion dollars how does what has been happening clear the path for that because what the it seems what the SEC has effectively done let's leave binance to the side for a moment right because there are some Finance specific issues they've effectively said all the tokens have to be regulated as securities does that sort of then negate the market for tokens in the U.S does it just make Bitcoin valuable how what does this do to the landscape exactly in the wake of this well let's read the room let's go to coinbase let's talk about butting heads for the last four years with the regulator it's now Crystal Clear what Gensler wants he is calling it a broker-dealer exchange period there's no greatness now if I'm on the board of coinbase or I'm a shareholder which I'm not and I certainly have almost taken all of our Capital out of there I have zero interest as an Institutional Investor in putting one cent into an exchange a service a centralized wallet that is at war with the regulator I serve every day I have no option but to serve the SEC if I want to issue Securities I want to participate in financial services whether I'm here in New York or I'm in Abu Dhabi or London England or in Zurich we all play by those rules we have for decades we understand the rules we've built it into our systems we report to it there is no optionality there and then you say here's an asset class you're interested investing in but while you're at it we're going to war with the SEC so you can invest with us and we'll go to war our our fourth battle with the SEC maybe there's a new idea here there's a new idea for you how about swapping out the management of coinbase finding a new leader that doesn't want to be Don Quixote in front of windmills and constantly fight a regulator that's told him three times no the answer is no and I hear it the rest of the world hears it but apparently he doesn't and I hate to be critical but why can't we find a leader that wants to sit down with the staff and Gensler himself and say okay worst case hear me out on this let's agree Bitcoin is a security let's say usdc is an actual uh Equity that pays a dividend okay let's treat usdc as not a speculative asset but when it pays yield that's interest income if you want to lend a token that's a dividend and it's a security would you up or set if you sell it or you you don't or you make money you don't that's a long-term or short-term capital gain what's so wrong with that why not agree to that and then have a trillion dollars come into the market once you've had that agreement I'm okay with whacking Brian he's a great guy putting someone else in there he's a great guy he's a Pioneer but if you worked for me I'd fire him I don't want to go to war with Gensler that's a really bad outcome for me they've decimated their stock they've decimated their market cap and they want to do it again I mean that's just insane just a fine point on that you've essentially kind of decrease your positioning or your portfolio weighting of cryptocurrency now from 20 which is what it was maxed out at last year down to five percent that's one technology where else within your portfolio are you looking across some of the Cutting Edge technology generative AI even right now do you chase the fomo trade in AI I don't chase it but I already own those names I've I've owned you know the semis I've also owned Microsoft I've owned Google you know these have been names that are part of our portfolio and have been forever is equity so we've enjoyed this extraordinary run on Tech we have an index that does that so I'm not worried about that exposure you're right we've taken down crypto a lot while we wait out the war we're we're at War now and so you you've you know binance is is a I'm actually it would be great to resolve this let the last shoe drop binance has that BNB token if it goes to zero it's FTX all over again and once this is over and once we've agreed that these are securities and once we've agreed that these are broker dealers under the same rules that everybody else has to operate we have a new nascent industry that's going to take off again this should be considered a rebirth and I'll take my asset allocation back up to 20 when that occurs what's wrong with that I mean this this story is getting boring it's getting boring hey let's fight the security Exchange Commission one more time what a stupid idea yeah uh we want to talk about another topic though here we when we think about the other areas of the economy that many who we've spoken with on a day and day out basis they are looking at the fed and what the fed's going to do from here and trying to Telegraph uh what Q3 2023 recession how are you looking at that how are you trading around that how do you believe the FED has done in terms of their own job I have to admit and I've been a Fed Watcher I have to be for my whole career because I'm trying to figure out like everybody else what they're going to do with rates this is an extraordinary situation we may actually and I say we as a market may have actually engineered a soft Landing we have been waiting this is the most highly anticipated recession that's never appeared number two I think there'll be another 50 basis points of rate hikes to get us kind of into that five and a half terminal rate which means money will trade at sort of seven and seven and a half percent of the best credits all the way up to 15 we've had great economies with rates like that in the past and we are still at full employment and that here's the one challenge the data hasn't changed on inflation it's still north to four percent so if you think the fed's going to stop I think you're nuts they're going to keep going another 25 basis point another 25 basis point after that and for all the criticism that house taken he has been a master of guiding this ship to a Slowdown that looks like it won't even be a deep recession right now it looks like that and as evidenced by new highs in the market I mean are you kidding this guy should be given an Oscar I mean he's done a hell of a good job and so yeah he'll get bashed every day and that it's political and all the rest but tell me what he's done wrong by as evidenced by where the market is today well as you say a lot of people bash and so they have a lot of things to say about that but I I want to turn to another area of your expertise which is funding startups and as you're in your role on Shark Tank right and deciding which startups are worth your money and and we thought we would have a fun hypothetical for you let's say a company comes to you maybe it's called banana and it says we have a thirty five hundred dollar uh headset looks like ski goggles that we're gonna sell to people it's going to allow you to do all kinds of cool things with apps and sort of augmented reality and this is what we're going to be trying to sell to the public would you would you fund that kind of a product I was having this exact narrative with my tax son who is who's a deep deep dive techie and I said this is absurd he said dad you once worked for Steve Jobs I said that's true I did and he told you how many countless times they don't know what they want until you give it to them and I thought Trevor you're right he did say that he's always been right that way and so there's two billion cell phone users in the Apple platform right now 2 billion all you need is one half of one percent to even want to try this four thousand dollar headset in the context of the platform they're providing and you've got a monster market and so in that sense I think the narrative should be let's see what happens but it also boys a much lesser version at 500 bucks from meta which has also been spending billions developing this some percentage of the population may not be like you and I I don't want to wear a computer on my face that just doesn't turn me on at all but that doesn't mean I'm I'm the market but you know I think about the potential and if you told me look do you want to have a look at a new condo in La just put this headset on for five minutes and I'll give you a virtual tour or how would you like to have an expert walk you through the new Museum in Egypt for King Tut instead of flying there it's a billion and a half dollar facility about to open in a few months I'll give you a tour just for you put on this headset now you're talking and I can't see that happening and if you said to me look how would you like to Market O'Leary Fine Wines and have someone be with you when you're blending I can't taste it through the headset though no but I can taste it for you and I and I certainly know how to do that and and I'm just thinking to myself yeah I see that so there'll be a high-end Market that apple is going to pursue and there's going to be different tiers but you need the software platform but your original question about startups we're having a real hard time with capital right now since I was last here Venture Capital has dried up on first rounds there hasn't been a new deal in three months and and there's just no appetite because every VC including me is is looking at their existing portfolio we have over 30 companies we're saying which ones are going to survive which ones aren't going to make it where do we put more Capital we're not looking right now although Shark Tank starts next week and there'll be all kinds of new deals but I'm licking my chops for this season because the valuations are going to come way down way down to the 2008 levels when we started this show decades ago and I think we're going to have a very interesting season just lastly while we ask you or while we have you there's going to be a lot of focus and there already has been a ton about what it means to be a purpose-driven business there's been kind of even more swirling around Disney and their battle with Ron DeSantis but even more recently Target and them pulling some items of clothing that had to do with support of lgbtq plus rights and for what we've seen with how people are now calling on Target and the business community as a whole to stand firm in their support of the community I wonder what it means to you for companies to be a purpose-driven business while at the same time understanding the market that they're operating in and still moving forward with the values that they want to convey to Consumers and their customers well you're raising a very good question because it's measured by market capitalization let's take the example that started this whole narrative Bud Light when you're marketing a beer you are selling a commodity your beer is no different than every other beer except its brand that's it and so your job is to take care of your customer your employees and ultimately your shareholders or stakeholders that have put up Capital to risk it and you've spent decades building America's beers by spending billions of dollars in advertising is it really your job and I speak to the CEO and then the board above that man or woman to get involved in educating beer drinkers about gender about that though or was it about someone on the marketing level actually thinking this would be a good idea and trying to appeal to a different Market than traditionally they had appealed to I mean you have to tread that line right between alien you don't want to alienate your existing Market if we can argue about what why we they were alienated but an appealing to a new market like that's a tough line to tread isn't it how about this you lost me nine billion dollars tread that line I'm firing your rear end and that's exactly what happened right because you did not understand your job was to sell a liquid commodity you did not understand the relationship between that liquid commodity b or you're selling beer your job is not to educate the entire Society on gender neutrality or not that is not your role Your Role is to sell beer and if you can't sell beer I think you should be terminated and that's what I think should happen nine billion dollars in people's retirements accounts but that's a lot of money for what why did you do that and so I think stay in your lane read the room understand your mandate and don't get too far off your primary objective selling beer and that also goes to Target and it goes to everyone somebody else that thinks well my job is not no longer to take care of just my constituencies my my customers and my my employees and my stakeholders I am going to educate the world and it's not but I I think but it's not just they're not doing it out of some necessarily some sense of what are they doing it for who are they it's about brand identity it's about supporting their employees in a company like Disney it seems to be working out quite well I mean they've had they are supporting their employees they've had Gay Days at Walt Disney World in Florida for years and they have a very loyal employee base so in some cases it works quite well wait CEO that actually started this mandate I think I forgot his name already he's ancient history because he took that company stock down from I think 126 to 90 and that matters too that's billions of dollars a race because he had a well let's get involved in a huge debate about this I think Mickey and Minnie want to take care of kids entertainment that's their mandate it's family values Republicans gay people General neutral people they all want to go to Disneyland to be entertained not to be educated on social issues I believe I don't think it's about education I think well then what is it we've got support and I think they brought back the old CEO Liker and he's taking himself wow wow but he's also doubled down all right we got to leave it here we got to leave it here all right Kevin O'Leary O'Leary Ventures chairman joining us here in studio

Channel: Yahoo Finance

Views: 9,760

Keywords: Yahoo Finance, Personal Finance, Money, Investing, Business, Savings, Investment, Stocks, Bonds, FX, Currencies, NYSE, Equities, News, Politics, Market, Markets, Yahoo FInance Premium, Stock market, crypto

Id: XROQLZWxXHc

Length: 16min 58sec (1018 seconds)

Published: Sun Jun 11 2023