Mark Cuban says last year's crypto boom was '99% noise' – and Sam Bankman-Fried's arrest could pop the bubble
- Mark Cuban said there's still some underlying value in crypto despite the ongoing sell-off.
- "99% of it was noise but there's real value there," he told 'The Problem with Jon Stewart' Monday.
Billionaire investor Mark Cuban still believes there's some value in the crypto space, but says the asset class's stratospheric rise in 2021 now looks like it was almost all "noise".
Last year's bull run led to cryptocurrencies becoming overvalued, before signs of stress in the industry — such as the fraud charges against FTX founder Sam Bankman-Fried — could pop that bubble this year, he said.
"There's the signal and the noise," Cuban told Apple TV+'s "The Problem with Jon Stewart". "In crypto, 99% of it was noise. But there's real value and signal there."
Cuban — the owner of the Dallas Mavericks NBA team and "Shark Tank" investor — was speaking Monday as a brutal year for digital assets draws to a close.
The price of bitcoin, the leading cryptocurrency, has plunged 64% to below $17,000 since January, and it's down 75% from its all-time high of almost $68,790 in November 2021. The value of the global crypto market is 63% lower than a year ago.
Stablecoin issuer Terra and hedge fund Three Arrows Capital collapsed earlier in 2022 as the crypto selloff brought to light potential instabilities in the digital asset sector. More recently, the disgraced founder of now-bankrupt FTX Bankman-Fried — commonly known as "SBF" — was arrested in the Bahamas last week and faces fraud charges in the US.
Those events prompted Cuban to talk about the collapse of Enron and WorldCom MCI during the early-2000s selloff in tech stocks.
"It takes a couple of frauds to pop a financial bubble," he said. "It took Enron and WorldCom MCI."
"Now it's going to take what we saw with Sam and Terra and Luna and Three Arrows Capital," he added. "So now crypto will get its act together."
But the sector can only do that if there's greater transparency and regulatory oversight, according to the billionaire investor, who has described crypto as a big part of the future.
FTX's new CEO John Ray III has said the exchange misstated the overall value of its crypto holdings, while a Reuters investigation into rival exchange Binance showed most of its balance sheet remains hidden from public view.
"Where you find opacity and lack of transparency, you're going to find fraud," Cuban said. "When it comes to legislating any of this, it comes down to who is willing to keep the kimono open."
"Because it's digital, it's easier to disclose, it's easier to review, it's easier to analyze. But we have no transparency and as long as that's the case, SBF can do what he did," he added.
Cuban is a longtime crypto bull who previously said he would accept joke token dogecoin — which has tumbled 56% during this year's selloff — as a method of payment for Dallas Mavericks merchandise and tickets. He has owned the Texas-based NBA franchise since 2000.