The implosion of FTX was caused by Binance, according to billionaire investor Kevin O’Leary. This is what the investor claims during a hearing of the US Senate on December 14. O’Leary himself is a paid representative of FTX crypto exchange, who shared details of conversations with former FTX CEO Sam Bankman-Fried during the hearing.
Bitcoin exchange played with customer funds
O’Leary’s story shows that Bankman-Fried, FTX and Alameda Research used a total of $3 billion in customer funds to buy back Binance’s FTX shares. When asked by Senator Patrick Toomey about why FTX failed, O’Leary replied that he has an opinion but no facts.
He then revealed that according to him, Binance’s CEO was at war with the former CEO of FTX. By that he was of course referring to Changpeng Zhao and Bankman-Fried.
According to O’Leary, that was primarily a war fought for legal reasons. Binance had a 20 percent stake in FTX, which required it to enter into discussions with certain legislators.
However, Zhao and Binance did not want to cooperate, forcing FTX to buy back the shares. Those shares eventually had to be bought back by SBF and its companies at a valuation of $32 billion.
Painful moment for crypto exchange FTX
That $3 billion purchase was a painful one for the balance sheet of FTX and, by extension, Alameda Research. After that, in November, Changpeng Zhao decided to liquidate the FTX Tokens that Binance had. That eventually caused the digital bank run that killed FTX.
“These two companies started a war with each other and one of the two managed to take out the other. There may be nothing wrong with that, maybe there is nothing wrong with war and love, but Binance is now a giant unregulated monopoly.”
said O’Leary. Incidentally, O’Leary was paid $15 million from FTX to join the exchange as a representative. With the collapse of the exchange platform, the successful investor, according to his own story, lost at least 10 million dollars. He receives a lot of criticism from the crypto community for his statements, such as from Ripple CTO David Schwartz:
Does this man have no shame? Against the entire weight of an absurdly massive amount of evidence, he blames the FTX collapse on ….. Binance. https://t.co/gLgmROP3Da
— David “JoelKatz” Schwartz (@JoelKatz) December 14, 2022
