Palantir Founder On State Of Crypto Expect Collapse Of More Companies

Expect collapse of more companies

With several cryptocurrency projects collapsing, leading to a widespread market correction, industry players are warning that the situation could worsen in the future.

In particular, Joe Lonsdale, the founder of the software company Palantir and venture capitalist, suggested that most cryptocurrency companies will likely collapse in a Ponzi scheme-style bankruptcy, he said in an interview with Fox News published on December 4.

However, Lonsdale emphasized that cryptocurrencies are here to stay, while most centralized entities will be most affected.

“In general, I think you’re going to let most things collapse. Various crypto lenders, crypto tokens and other parts of the ecosystem were a Ponzi scheme, and it made no sense at all. That’s what you would expect in any situation where you have stuff that’s not regulated,” he said.

The sustainability of the crypto sector

Indeed, the collapse of the FTX cryptocurrency exchange sent the cryptocurrency market reeling, calling into question the sustainability of the sector. Despite the uncertainty, Lonsdale maintained that cryptocurrency technology has more use cases in the future, such as facilitating cross-border transactions in exchange for promoting financial freedom.

“It makes sense to have more decentralized power and for something like Bitcoin to exist. It helped people get money from Russia, from Venezuela, from China. <...> It allows more sort of freedom for the financial system from governments that behave really badly,” Lonsdale added.

It is worth noting that since the collapse of FTX, questions have been raised about the governance of centralized crypto companies. In particular, the main area of ​​contention centers around the disclosure of financial records.

Crypto speculative bubble

In addition, some companies filed for bankruptcy after the market recorded a bull run in 2021. However, according to Lonsdale, the crypto space was mainly in a “speculative bubble driven by cheap money and driven by a lot of these Ponzi schemes.”

In this line, a Finbold report indicated that former Securities Exchange Commission (SEC) enforcement officer John Reed suggested that USDT stablecoin provider Tether may be running a Ponzi scheme over what he labeled a lack of transparency.

At the same time, Reed had earlier expressed criticism about the management of FTX as funder Sam Bankman-Fried came under fire for his management of client funds. According to Reeds, the FTX situation is worse than the infamous Bernie Madoff Ponzi scheme.

Featured Image: Screenshot via FOX News Video.

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