FTX spokesperson Kevin O’Leary testified before the Senate Banking Committee on Wednesday, discussing the collapse of the cryptocurrency trading platform, and he recalled a conversation he had with former CEO and co-founder Sam Bankman-Fried right after things went south.
O’Leary recalled that after his company assets were rendered worthless, he had a hard time getting any answers, so he called Bankman-Fried himself.
“After my accounts were stripped of all of their assets and all of the accounting and trade information, I couldn’t get answers from any of the executives in the firm, so I simply called Sam Bankman-Fried and said, ‘Where is the money, Sam?’” O’Leary told the committee in response to a question regarding why he believes the company failed.
He said Bankman-Fried’s response began with him claiming he did not know because he no longer had access to the company servers.
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“I said, okay, let’s step back. This is a simple case in my mind of where did the money go?” O’Leary continued. “And I said, ‘Sam, walk me back 24 months. Tell me the use proceeds of the assets of your company. Where did you spend it?’”
O’Leary then relayed Bankman-Fried’s answer, which was that during the previous 24 months, he had paid between $2 billion and $3 billion to competitor Binance to repurchase FTX shares that Binance or its CEO Changpeng “CZ” Zhao had acquired. O’Leary explained that according to Bankman-Fried, Binance refused to comply with requests from different jurisdictions in order to get licensed, so he ended up buying back the shares at a premium.
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O’Leary then directly addressed the initial question posed to him about what happened to FTX.
“In my view, my personal opinion, these two behemoths that own the unregulated market together and grow these incredible businesses in terms of growth 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,” he said.
“Now, lots of other reasons, I’m sure, but that’s my personal opinion,” he added.
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FTX declared bankruptcy on November 11. Since then, Bankman-Fried has been hit with charges from the SEC, CFTC, and federal prosecutors in the Southern District of New York based on allegations of conspiracy and fraud. Among the allegations were claims that Bankman-Fried took investor funds, transferred them to his crypto hedge fund Alameda Research, and used them for personal purposes, including political contributions.
Bankman-Fried was arrested in the Bahamas the evening before he was scheduled to testify before a House committee.