An investor named Kevin O’Leary testified before a United States Senate committee on December 14 that Binance was to blame for the collapse of FTX. As a spokesperson for FTX, O’Leary talked about conversations he had with Sam Bankman-Fried in the days before FTX filed for bankruptcy.
O’Leary testified that he had asked SBF how customer funds had been used over the past 24 months. He was told that almost $3 billion had been used to buy back shares of FTX that Binance already owned.
O’Leary said, “I have an opinion. ” when asked by Senator Patrick Toomey what went wrong with FTX. I don’t have the documentation,” he said before saying that in his opinion, the leaders of Binance and FTX were at odds with one another.
According to O’Leary, the silent war between the leaders of the two cryptocurrency exchanges is centered on the issue of regulation. Binance and Changpeng “CZ” Zhao had to follow the requests and regulations of regulators in various countries because they own nearly 20% of FTX.
Sam Bankman-Fried says that CZ didn’t help when different government agencies asked for information that was needed to give FTX a license. At a valuation of close to $32 billion, management and Sam Bankman-Fried had no choice but to buy him out.
O’Leary claims that Zhao’s decision to sell Binance’s FTX token (FTT) holdings at the beginning of November was made to drive down the token’s price because of “recent revelations that have come to light” and “post-exit risk management.” According to O’Leary:
As far as I’m concerned, these two were at war with each other in an unregulated market, and one purposefully drove the other out of business. Binance is an enormous, unregulated global monopoly that has driven FTX out of business. “Maybe there’s nothing wrong with that; maybe there’s nothing wrong with love or war,” says O’Leary.
During his talk, he also advocated for cryptocurrency regulation.
“This nascent industry is culling its herd.” Going or gone are the inexperienced or incompetent managers, weak business models, and rogue unregulated operators. Hopefully, these highly publicized events will put renewed focus on implementing domestic regulation that has been stalled for years. Other jurisdictions have already implemented such policies and are now attracting both investment capital and highly skilled talent. “In the U.S., we are falling behind and losing our leadership position.”
As a spokesperson for FTX, O’Leary made close to $15 million. Over $10 million in tokens were lost by him when FTX went down.