[Markets Insider, Getty]
- Billionaire Mark Cuban told The New York Times he learned a hard lesson about crypto in June.
- “I should have done more homework” on the little-known DeFi token before investing, he said.
- Cuban also revealed he lost $200,000 on the investment after whales cashed out and spurred panic selling.
Billionaire investor Mark Cuban learned a key lesson about cryptocurrencies the hard way, The New York Times reported.
The Shark Tank star and crypto guru previously revealed he had experimented with something called yield farming, where he bought up a cryptocurrency called titan and lent it back to the platform, essentially providing liquidity and making money on the interest. Then the token crashed.
In retrospect, he told the Times, “I made money as a liquidity provider and lost money as a speculator. I should have done more homework on it.”
The DeFi token plummeted from $60 apiece to zilch in one day after crypto whales dumped their holdings and caused panic selling, Insider reported back in June. At the time, Cuban tweeted “I got hit like everyone else,” though he didn’t reveal the amount. The Times has since found out he suffered a net loss of about $200,000.
His conclusion from the episode, according to the report, is that investing in a cryptocurrency that doesn’t have a reason for existing is wrong. Back when the token crashed, Cuban told Bloomberg he was “rugged,” a reference to a crypto scam called a rug pull, but added that it was his fault for “being lazy.”
“The thing about de fi plays like this is that it’s all about revenue and math, and I was too lazy to do the math to determine what the key metrics were,” he said in an email to Bloomberg.
A rug pull refers to a scam in which the makers of a token cash out their gains after launching the crypto project. As the market for cryptocurrencies has soared, so has the number of scams. Rug pulls, which are mainly related to DeFi tokens, cost investors nearly $3 billion in 2021, according to one estimate.
By Natasha Dailey