The FTX crash was triggered by Binance, investor Kevin O'Leary claimed on Dec. 14 speaking at the US Senate committee hearing on the crypto exchange's collapse. O'Leary, who was a paid spokesperson for FTX, provided details about conversations with Sam Bankman-Fried in the days before FTX filed for bankruptcy.
During his testimony, O'Leary said that he had asked SBF about how client funds were used in the last 24 months and was told that almost $3 billion was used to buy back FTX shares owned by Binance.
When asked by Senator Pattrick Toomey why FTX failed, O'Leary replied, "I have an opinion. I don't have the records," before revealing his opinion that the heads of Binance and FTX were at war.
O'Leary said that regulation was at the center of the silent war between the heads of the two crypto exchanges. Binance and Changpeng "CZ" Zhao had to comply with requests from regulators and compliance standards in different jurisdictions as shareholders with nearly 20% of FTX.
"Apparently, according to Sam Bankman-Fried, CZ would not comply with requests from regulators in different jurisdictions to provide the data that would clean them up. [FTX] for a license [โฆ] The only option management and Sam Bankman-Fried had was to buy it at an extraordinary valuation of close to $32 billion."
The share purchases hurt FTX's balance sheet, O'Leary said, and Zhao's decision to liquidate Binance's position in the FTX token (FTT) in early November citing "recent revelations that have come to light" and " post-departure risk management. reasons, he intended to drive down the price of the token. O'Leary stated:
"From my point of view, my personal opinion, these two [...] in an unregulated market [...] with this incredible business in terms of growth they were at war with each other, and one put the other out of business, intentionally. Now, maybe there's nothing wrong with that, maybe there's nothing wrong with love and war, but Binance is a massive unregulated global monopoly now, and they put FTX out of business."
O'Leary also spoke out in favor of a cryptocurrency regulatory framework during his speech:
โThis nascent industry is culling its herd. Gone or gone are inexperienced or incompetent managers, weak business models, and rogue unregulated operators. Hopefully, these highly publicized events will put a renewed focus on the implementation of national regulation that has been stalled for years. Other jurisdictions have already implemented such policies and are now attracting investment capital and highly-skilled talent. In the United States, we are falling behind and losing our leadership position.โ
As a paid spokesperson for FTX, O'Leary received nearly $15 million for his services. The allegedly lost over $10 million in tokens held in FTX wallets due to the crash.
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