Top 5 Examples of Why You Shouldn't Take Billionaire Advice (Or Any) In Crypto

About two weeks ago, we published an article about a recent Twitter buzz that USDC could be on the brink of collapse — after UST depegged and crashed, the market, in general, is worried about other stablecoins not being stable at all. And this comment from a reader caught my attention:

Even though I think there is a remote chance of USDC depegging — and other stablecoins are more likely to crash before — I would never blindly trust a project. Many investors base their investment decisions on billionaires’ advice, and here are five great examples of why you shouldn’t:

1. Mark Cuban and Voyager

In October 2021, Mark Cuban’s NBA team, Dallas Mavericks, partnered with Voyager — what would be a five-year sponsoring contract between both companies. Less than a year later, the crypto platform filed for bankruptcy since it was heavily exposed to the 3AC crypto hedge fund. Many people were driven to invest in Voyager after he closed the partnership deal were highly affected by it.

2. Mike Novogratz and LUNA

The CEO of Galaxy Digital, a company that provides financial solutions related to crypto, was an evangelist of the Terra (LUNA) project and even got a tattoo in January 2022 when the token reached $100.

Five months later, UST depegged, LUNA collapsed, and Galaxy Digital had a Quarter-to-Date Loss of $300M in May, given the current market conditions (partially due to the lack of trust in the company). Now, Novogratz says he is humbled by his biggest crypto mistake.

3. Zhu Su and Three Arrows Capital (3AC)

Three Arrows Capital was a billion-dollar hedge fund that has recently filed for bankruptcy as it failed to repay its debts. Zhu Su, the co-founder of 3AC, was an avid supporter of the LUNA token and often suggested in his tweets that he was bullish on the token.

After 3AC was publicly known to be at risk, Zhu Su’s last tweet had a much humbler tone: “We are in the process of communicating with relevant parties and fully committed to working this out.”

4. Elon Musk and Dogecoin

Elon is globally known for supporting Dogecoin, and every action he made or tweet he wrote used to pump DOGE prices up. In the current market scenario, where most altcoins were at least 60% down — DOGE included — even Elon’s influence seemed incapable of driving prices up.

5. Barry Silbert and Genesis Capital

Genesis Capital recklessly granted an undercollateralized loan to 3AC, one of the main companies that led the market to the recent turbulence it went through. And Genesis is backed by Digital Currency Group (DCG), a crypto investment fund by Barry Silbert.

It’s interesting to see how a careless action that seemed riskless contributed to one of the largest cases of bankruptcy in the crypto sector. Reports show that 3AC borrowed $2.3B from Genesis (more than 67% of their debt), which is now the lender of a bankrupt company.

What can you learn from these cases?

Even the crypto billionaires and expert traders make mistakes, and, in most cases, it’s due to their excess of confidence in their own thesis that they opt to disregard the worst-case scenarios and don’t perform risk management appropriately.

So instead of simply following what billionaires do, or even Twitter anonymous accounts that surge out suddenly with a thread — you should perform your own due diligence and invest in what you have confidence in based on your analysis.

It is simple yet valuable advice that, if not followed, might have you losing all your savings, as happened with crypto investors recently.

Joe Robert is currently the Chief Executive Officer of Robert Ventures, with over 20 years of asset management experience. Since he started Joe has created predictable double-digit returns for investors & Partners. Joe has invested in seed rounds with equity and tokens, along with a portfolio of Bitcoin, Ethereum, and other top cryptocurrencies.

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