Billionaire burned by crypto crash

Author
news.com.au,
Publish Date
Wed, 23 Jun 2021, 1:50PM
Dallas Mavericks owner Mark Cuban. (Photo / File)
Dallas Mavericks owner Mark Cuban. (Photo / File)

Billionaire burned by crypto crash

Author
news.com.au,
Publish Date
Wed, 23 Jun 2021, 1:50PM

Billionaire investor Mark Cuban has said it was "my mistake" for not doing his homework on the Titan cryptocurrency which dropped from $60 to $0 in a day.

The owner of the Dallas Mavericks basketball team and Shark Tank host said on Twitter that he took a "hit" on Titan and says he took full responsibility for the loss.

The cryptocurrency token lost nearly all of its value last Wednesday.

Cuban has not disclosed the amount he lost in the crash but told Bloomberg that his investment "wasn't so big that I felt the need to have to dot every I and cross every T."

He has called for more regulation to "define what a stable coin is".

Cuban says he wasn't sure if the crash was due to a "rug pull", which is basically a cryptocurrency exit scam.

Iron Finance, the team behind Titan, has denied this, saying "there is no hacks, no exploits, or rug-pullings".

In a statement, Iron Finance said the Titan crash was due to "the world's first large-scale crypto bank run", in which large investors in Titan began to sell, prompting a further sell-off.

"When people panic and run over to the bank to withdraw their money in a short period, the bank may and will collapse," it said. "We have learned a great deal from this incident and while nothing could be fixed in the current system, we will continue our journey with more products in the future."

Experts have warned of the dangers of investing in cryptocurrencies like Titan and Bitcoin.

Overnight, bitcoin dropped under US$30,000 for the first time in five months.

China's central bank said it had summoned officials from the biggest lenders to reiterate a ban on cryptocurrency services.

China has imposed new restrictions on energy-intensive mining and reiterated rules for financial firms about providing crypto services.

Bitcoin appeared as if it was gaining new fans after El Salvador decided earlier this month to make bitcoin legal currency. But China's moves are outweighing any positive momentum from that decision.

Bitcoin was down 8 per cent to US$29,674.25, its lowest level since January 28, according to Coin Metrics. Bitcoin managed to recover from the sub-US$30,000 level, climbing to US$32,453.9.

Other cryptos joined the sell-off before paring losses, with ethereum, the second-biggest digital currency by market value, slumping 5 per cent. The selling spilled over to smaller coins like Dogecoin, a meme-inspired crypto that at one point tumbled more than 25 per cent to erase all of its gains since April.

Traders had warned a break below the psychologically important US$30,000 level could lead to more losses.

"Bitcoin has violated an important support level and it is likely that we may see more panic in the market as investors will think that it may be the end of bitcoin," wrote Naeem Aslam, chief market analyst at AvaTrade.

"But investors should remember that bitcoin is a kind of asset which has fought many similar pessimistic views many times. The current sell off could be the opportunity for many investors to load their portfolio with bitcoin, which is selling at a huge discount."

Cuban told Newsweek that he hadn't "dug in enough to know if there was something nefarious going on. But I do take responsibility for not doing the math before I invested.

"It was all in black and white how the math of the stable coin and Titan worked. If I looked it was there — how much needed to be added in order to support Titan and what would happen if sales overtook adds. I chose not to do the work.

"For me, I decided it wasn't worth my time to dig in far enough. I took a flyer. My mistake," he said.