Over the past 12 years, Bitcoin has inspired a huge crypto industry technically worth $2 trillion before its most recent correction — ushering in billionaire speculators like Mark Cuban and Bill Miller along with it.
Thousands of cryptocurrencies have been issued in that time, with many challenging traditional assumptions of money and the wider financial system. But while 2021 was crypto’s break-out year in many respects, the concept is still considered novel with many supporters and equally many detractors.
Following Satoshi Nakamoto’s apparent principles, those who support Bitcoin claim it’s peer-to-peer, digital money based on decentralized consensus. On the other hand, those who criticize Bitcoin will often project that it’s a Ponzi scheme consuming excessive amounts of energy.
While endless philosophic and economic debates on cryptocurrency persist, some folks are making a lot of money from it. Some are losing a lot.
It’s understandable: crypto is a new and somewhat complex invention, so many investors still have a hard time either grasping it or understanding how to make money from it.
Even seasoned billionaires find navigating the cryptocurrency market tough, particularly Cuban who has a history of getting wrecked with dubious altcoins.
Cuban collects Ponzi-esque crypto tokens
Reports of Cuban investing in Bitcoin, Ether, and Dogecoin are widespread but his pet crypto-project Klima DAO has crashed a staggering 97% since its launch last October.
This has left Klima’s 5,000-odd current holders — most of them retail buyers — stuck with bags of worthless tokens leading into our current bear market.
Klima is a treasury for speculative, tokenized carbon credits that promises to revolutionize carbon markets with blockchain.
KLIMA’s price is supposed to perpetually increase as more carbon credits are locked inside the treasury, however the exact opposite has happened.
Cuban seems to have been inspired to back Klima after reportedly investing around $300,000 in decentralized finance (DeFi) project Olympus DAO in mid-2021. In fact, Klima is a fork of Olympus.
DeFi projects are generally powered by public blockchains and mirror traditional financial services such as borrowing or lending. The total market cap of DeFi tokens stood at around $100 billion at its peak last year.
Decentralized autonomous organizations (DAOs) exist within the DeFi ecosystem. DAOs are effectively collectives in which many processes are driven explicitly by code.
Token holders can vote on boardroom and other governance matters; more tokens means more sway.
Olympus entered the public market in March 2021 with the mission of providing a cryptocurrency backed by enough stablecoins to prevent depreciation against the US dollar.
So far, Olympus has failed as the price of its native token has dropped 84% since its launch.
Indeed, Olympus now trades at all-time lows, implying that Cuban is down on his initial investment (unless he already dumped his stash like some of the project’s largest token holders).
But there were already signs that Cuban’s foray into altcoins would be a failure.
Dot-com billionaire to shitcoin aficionado
Just one month before buying Olympus tokens, Cuban was rug-pulled of his investment in Titan — one of the many “algorithmic” stablecoins to have lost its peg and crashed nearly 100% over the years.
Cuban claimed that he regretted not doing his math before buying Titan, but so far he hasn’t made any similar statements on his pet-project Klima.
Wider concerns about the viability of so-called “rebase DAOs” (a subset of Ponzi-esque crypto schemes to which both Klima and Olympus belong) aside, Cuban also seems to have invested in:
- Litecoin, down 20% in the past year,
- lending protocol Aave, down 52% in the past year,
- decentralized exchange token Sushi, down 60% in the past year.
Still, Mark Cuban is a successful billionaire who acquired his wealth in the dot-com boom and doesn’t need crypto to get rich or even generate more riches.
Forbes values his fortune at $4.5 billion, more cash than most can spend in multiple lifetimes.
It must be stressed that despite what Cuban claims, his digital asset forays are tiny adventures compared to his current equity holdings and previous investments.
Cuban made his fortune selling his online broadcasting company Broadcast.com to Yahoo! in 1999. Today, he’s more known for Shark Tank shtick and for owning the NBA’s Dallas Mavericks.
The latter are the main sources of Cuban’s gains in crypto — not by buying and selling altcoins (he also collects NFTs but it’s unclear exactly which he’s bought, which were gifted, and which serve as promotions for his NBA team).
Cuban’s investment in Polygon could also explain his propensity for backing tokens issued and powered by that network (Olympus, Klima, and Titan were all launched on Polygon).
‘Do your own research’ does heavy lifting
Given this context, click-grabbing headlines such as “Mark Cuban is investing 80% of his non-Shark Tank investments in crypto” are basically meaningless.
What should rather be said is that Cuban buys crypto with money he definitely can lose and investors who follow him should keep expectations low.
Cuban gives different advice to his followers. In an interview with CNBC, Cuban claimed investing in altcoins is just a matter of doing your own research, and that it’s just like investing in stocks or bonds.
Cuban’s involvement in crypto has been consistently lauded and positively covered by both crypto media and mainstream media.
Crypto media loves superstars in the industry because it widens the reach of crypto, while mainstream media seems to have an affair with Cuban despite repeated allegations of rampant sexual harassment and domestic violence within Mavericks’ ranks.
Clearly, Cuban seems to be getting a pass for his outlandish and stupid things he says about crypto.
A media which strives to hold power to account and publish objective reports would’ve pressed Cuban further on his claim that ‘altcoins are the same as stocks or bonds.’
But one shouldn’t expect much better from CNBC, which regularly ingratiates its guests and allows them to get away with silly statements.
The question then arises: are people following Cuban blindly on his crypto investments just because he’s “Mark Cuban?”
OlympusDAO soared to all-time highs a month after Cuban declared his investment, only to crash soon after. And although Cuban doesn’t have the power to dictate markets he can surely influence retail to follow his steps.
Buyers of KLIMA tokens, for example, told this correspondent they had nothing positive to say about the famed Shark Tank superstar — other than they felt he was successful enough to initially sell them a scheme which failed miserably soon after its launch.
Cuban proves frothy markets breed bad crypto takes
Regardless, Cuban often switches tack on some of his more outlandish statements. One good example is a comment he deleted that compared the tech bubble of the 1990s with today’s crypto markets.
The quote was published by CoinDesk last January but was scrubbed from Cuban’s Twitter timeline soon after.
Cuban might’ve deleted the comment because it was glaringly honest and self-defeating to his own altcoin schemes.
After all, the dot-com boom saw lots of internet stocks go to zero after the irrational exuberance ended and the tech bubble popped.
Comparing today’s crypto markets to the dot-com bubble would imply that amongst the thousands of unprofitable and new companies, only the few will survive and grow to be successful.
That’s a bold claim to make when painting DeFi, crypto, and NFT markets with a broad brush while shilling high-risk tokens like Olympus and Klima.
Ultimately, the media — both mainstream and crypto — should provide a more critical outlook of Wall Street superstars in crypto. One should also scrutinize deeply what they promote and assess their pitches thoroughly.
Cuban’s backing of illiquid and speculative tokens has always come with a large number of articles which generally describe his investments in a positive way.
People like Cuban hold major influence over their followers due to their high status, and the media has the responsibility to see through this veneer to present an objective picture.
One doesn’t necessarily need to be gullible to follow Cuban blindly. When the media portrays a billionaire’s actions and investments constantly in a positive way, it gives the legitimate impression that this person is invincible and will always make the right choices.
Occasionally, we need to be reminded that billionaires are, in fact, humans too. They too make mistakes and they too can get wrecked – just like Cuban with his shitcoins.
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