Daniel Kuhn is a features reporter and assistant opinion editor for CoinDesk's Layer 2. He owns BTC and ETH.

Noted angel investor and fledging media mogul Jason Calacanis thinks the boot is going to come down on venture capital interests in crypto.

In an interview with Bloomberg’s “Odd Lots” podcast, Calacanis predicted a wave of litigation targeting promoters of crypto projects, following serious losses by retail investors who traded on the momentum and buzz that some financial institutions and investment moguls created.

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“I believe the overwhelming majority of tokens are securities, but they’re being dumped onto retail investors. And this is being done explicitly by venture firms,” Calacanis said. “This is going to blow up in the faces of the venture community.”

Calacanis, who made early investments in future unicorns Uber and Calm, was unwilling to name names. One that might come to mind is Calacanis’ friend, co-podcaster and billionaire co-owner of the Golden State Warriors, Chamath Palihapitiya.

Palihapitiya is a former Facebook executive turned “pro-social” venture capitalist. You might also know him as the “SPAC King,” who promoted a series of special purpose acquisition companies that are now deeply in the red, or the guy who bragged about buying SOL, Solana’s native token, at a discount while looking for a greater fool to offload on.

Now, Jason is not Chamath. Mere association doesn't mean Calacanis bears responsibility for his colleagues’ potentially fraudulent activity (former PayPal exec David Sachs, also a cohost of Calacanis’ “All In” podcast, was also a backroom SOL buyer). Calacanis is also largely right in saying that a vast number of crypto tokens are outright scams, or at the least risky “prelaunch companies” that should come with more disclosures.

The line

But it is telling how the powerful and influential protect their kind. Calacanis, a former journalist, isn’t shy of calling out what he sees as injustice – often causing social media rancor. His broader point that VCs have skirted securities laws, promoted and then backed out of useless tokens and given clueless founders a patina of legitimacy is right. But it’s also toothless.

There was another time that Calacanis came up to the edge of actual morality, but fell short. In January, speaking on the “All In” podcast, Palihapitiya said that the ethnic cleansing of Uyghurs in China was “below my line” of concern when it came to investing in that country.

“Disappointing,” Calacanis said in response.

It’s true that investors have to pick and choose their battles. Profit maximalism means identifying good products, with competent founders and – perhaps – doing what you can to help a company succeed. But Palihapitiya, who founded the venture firm Social Capital, claims he has higher ideals like combating climate change or developing poor countries.

It’s also true that Palihapitiya’s position toward the Uyghurs’ plight, while lacking empathy, is likely representative of how his friends think. This happens anywhere money mixes with morality. An aristocratic view, by definition, has to end somewhere.

Speaking out

The problem was Palihapitiya said the quiet part out loud. It was a Kinsleyan gaffe, coined by the former New Republic editor (Michael Kinsley) to describe those moments when politicians “speak an unpalatable truth.”

Calacanis drew his own line around generic VCs or “early investors,” and said “the people who are creating” crypto scams are “99% responsible.” Meanwhile, platforms and exchanges are essentially faultless. Did I mention he’s an investor in Robinhood Markets?

Again, Calacanis isn’t even wrong. But he is clearly clouded by cognitive dissonance caused by his personal stakes and relationships. In one breath, he suggested that only “qualified investors” should be able to trade crypto, and in the next, that people “should be able to gamble” or use their money as they want.

He also said that many who lost while trading crypto knew the risks and should take responsibility for their decisions, and praised millennials and zoomers for their financial acumen.

I’m not even troubled by Calacanis calling crypto “peak grift.” But he fails to understand how crypto is looking to subvert the traditional financial system by allowing anyone to get involved. Drawing lines cuts people out and skews markets, even if keeping everything open enables low rent hustlers or people like Palihapitiya to enter.

It might be that crypto needs guardrails. Increased regulation rapidly slowed the pace of new SPACs – which Calacanis called “really high-risk, high-reward” investments – likely for the better. But I am concerned about who gets to draw the line and where, and whether there really is something to the idea of radical, open markets.

On either side of the regulatory divide, people still have to call out scammers.

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Daniel Kuhn is a features reporter and assistant opinion editor for CoinDesk's Layer 2. He owns BTC and ETH.

Daniel Kuhn is a features reporter and assistant opinion editor for CoinDesk's Layer 2. He owns BTC and ETH.