He said FTX’s former CEO, Sam Bankman-Fried (SBF), told him that Binance, which held a 20% stake in FTX, refused to comply with regulators’ requests whenever FTX applied for a license in different jurisdictions.
Kevin O’Leary explains why he thinks FTX failed U.S. senators.
Shark Tank star Kevin O’Leary explained why he thinks the crypto-currency exchange FTX has collapsed during a congressional hearing, titled “Crypto Crash: Why the FTX Bubble Burst and the Harm to Consumers“, before the Senate Banking, Housing and Urban Affairs Committee on Wednesday.
Senator Pat Toomey (R-PA) asked O’Leary, “Why do you think FTX failed?“
Mr. Wonderful replied, “I have an opinion. I don’t have the records“. He then relayed what former FTX CEO Sam Bankman-Fried (SBF) told him after the Shark Tank star noticed that funds were missing from his FTX accounts. O’Leary told Congress:
“After my accounts were stripped of all their assets and all the accounting and business information, I couldn’t get any answers from any of the company executives, so I just called Sam Bankman-Fried and said, ‘Where’s the money, Sam?’
SBF replied to O’Leary that he “didn’t know anymore” because he had been “denied access to the servers“. O’Leary then told the Senate committee, “In my mind, this is a simple case of ‘where did the money go’“.
During their telephone conversation, the Shark Tank star asked Bankman-Fried to explain how he had used the proceeds of FTX assets over the past 24 months. It was then that O’Leary learned of a deal worth about $2 billion to $3 billion to buy back FTX stock from Binance.
“I didn’t know it at the time, but at some point, CZ… [Changpeng Zhao]who runs Binance, bought a 20% stake in Sam Bankman-Fried’s company in exchange for startup stock“, O’Leary told the senators. Mr. Wonderful then asked SBF why it had to buy back shares from CZ: “What would compel you to do that? Why not keep your assets on the balance sheet?“
Citing Bankman-Fried, Mr. Wonderful explained that whenever FTX applied for a license in different jurisdictions, CZ and Binance “did not comply with regulators’ requests to provide data that would clarify the situation.” [FTX] for a license“.
O’Leary pointed out that FTX spending about $3 billion to buy back Binance stock “stripped the balance sheet of assets“. He detailed, “In my opinion, my personal opinion, these two behemoths that own the unbound market together, and have developed these incredible businesses in terms of growth, were at war with each other.“The Shark Tank star concluded:
One bankrupted the other intentionally. Maybe there’s nothing wrong with that … but Binance is a huge unregulated global monopoly now. They put FTX out of business
“Now, many other reasons, I’m sure, but this is my personal opinion“, O’Leary said without mentioning the fraud or any other charges brought against FTX and Sam Bankman-Fried by the US government and regulators this week.
O’Leary recently revealed that FTX paid him $15 million to become its spokesman. After FTX’s collapse, Wonderful maintained that Bankman-Fried is among the best traders in the crypto space and that he would support him again if he had another business. The Shark Tank star also said that he almost got $8 billion to save the struggling crypto-currency exchange from bankruptcy. The former FTX CEO was arrested and denied bail in the Bahamas.