Shares of Alibaba should not have been allowed to be listed in the United States, billionaire investor and Alibaba shareholder Mark Cuban told CNBC on Tuesday.

"The largest IPO in the history of the stock market is a Chinese company and it's a communist country," Cuban said in an interview with "Closing Bell."

Therefore, it's difficult to enforce insider trading laws, he said.

"If someone calls up someone at Alibaba and says 'OK, I'm this bigwig and oh by the way you can tell me what's going on with Alibaba or let me tell you about the new gulag we just built in southern China.' There's no choice. What are they going to say, 'No, I'm violating insider trading laws in the United States?' They're not going to."