Kevin O’Leary, a popular Canadian businessman, said that Binance is at fault for the collapse of FTX. This was part of Kevin’s statement when he appeared to testify at a Dec 14 US Senate Committee hearing about FTX’s implosion.
Below is the full video on the inquiry.
O’Leary, who is also popularly known as Mr. Wonderful, is a paid endorser of FTX. He disclosed that he received $15 million as payment from the company. Kevin and other paid influencers are also included in a class action lawsuit for damages incurred by investors in the FTX’s collapse.
The Collapse of FTX is Nothing New and Blockchain is the Future
In his opening statement, Mr. Wonderful said that the FTX collapse is nothing new and it does not change the new technology’s promise. The recent collapse of several crypto companies culled the inexperience and incompetent companies and operators in the space.
According to Kevin, a lot of new graduates and talent are flowing into the crypto space and this makes it impossible for crypto not to flourish. He is also promoting sensible regulation for Dollar-backed stablecoins, which will be good for the US in the long run.
Mr. Wonderful Said that Binance Put FTX Out of Business
Senator Pat Toomey asked why FTX failed and O’Leary said that he does not have the records, but he shared his opinion. He asked Sam Bankman-Friedman (SBF), former FTX CEO, what happened to the money for the last 24 months. According to Mr. Wonderful, SBF claimed that he used $3 Billion to buy back shares from Binance.
Kevin also said that Changpeng Zhao (CZ), CEO of Binance, announced that they would be selling $500 million worth of FTX’s token and this pushed the price down. The crypto community is aware of this move since CZ announced it himself.
He boldly said that Binance is at fault for FTX’s failure. The two giant crypto exchanges were at war and FTX is the casualty.
“Binance is a massive unregulated global monopoly now, they put FTX out of business”
O’Leary, Dec 2022
Did FTX Shoot Itself?
Mr. Wonderful made it clear that he does not have access to FTX’s records and he is simply stating his opinion on what happened. His opinion is based on what SBF told him.
John Jay Ray III is FTX’s new CEO and he revealed several anomalies in the company’s bankruptcy proceedings. He exposed questionable business practices within FTX. In a nutshell, he found out that the collapsed crypto firm was in the hands of a very small group of inexperienced and unsophisticated individuals.
Alameda, FTX’s sister company, was also found to be exempted from the liquidation protocol.
In a congressional inquiry, he enumerated several anomalous practices that he uncovered.
- The use of computer structures that gave senior management access to customer assets without any security controls from redirecting those assets.
- Private keys for crypto assets were not given sufficient security or encryption
- Comingling of Assets between Alameda and FTX.com
- Absence of audited and reliable financial statements
- Alameda used client funds for margin trading which exposed customers to massive losses
- $1.5 Billion was used to pay insiders
When Ray was asked to compare Enron to FTX, he said that the Enron fiasco was sophisticated while FTX was “plain, old embezzlement”.
What do Politicians say?
Cynthia Lummis, an American Attorney, and Senator said that FTX committed good old fashion fraud by comingling funds between Alameda and FTX. She also disclosed that FTX customers who wanted to send money to the exchange were given an Alameda routing number instead.
Is it Sam’s or CZ’s Fault?
Facts are still being investigated by those involved in the bankruptcy proceedings. John Ray is a veteran in these cases and his goals are to find out the truth and recover assets for the sake of investors. He is a veteran in these cases and that gives him credibility.
John did not blame Binance for the failure. He pointed to FTX’s fraudulent business practices as the culprit.
It has always been Binance’s option to sell their FTT tokens. Everybody who trades expects that there is enough liquidity when they want to cash out. It is not the seller’s fault if the exchange doesn’t have enough assets to cover the transaction.
It wasn’t Binance who forced FTX to commingle assets with Alameda. Nobody forced Alameda to margin trade without any stop loss. Binance is not at fault if funds were hacked because of poor security.
SBF is now under custody and recovery of investors’ money is underway. Nobody can say the outcome of the investigation, but it is certainly not looking good for SBF.
Source: Unsplash (edited)
