Chamath Palihapitaya speaking at the 23rd Annual Sohn Investment Conference in New York City on April 23, 2018.

Chamath Palihapitiya, one of Silicon Valley's most outspoken tech investors, doubled down on calling the venture capital and tech start-up economy a Ponzi scheme on Wednesday.

In a letter released by Social Capital, his venture firm, Palihapitiya wrote that "the dynamics we've entered is, in many ways, creating a dangerous, high stakes Ponzi scheme" and a "bizarre Ponzi balloon."

Palihapitiya argues that "start-up valuations are massively inflated" as venture firms invest in each others' companies, push start-ups to use their funds to pay for user acquisition, and then raise investments from more firms. All the while, the venture firms can profit from management fees long before any of the start-ups they bet on are successful.

"These markups, and the paper returns that they suggest, allow VCs to raise subsequent, larger funds, and to enjoy the management fees that those funds generate," he wrote.