Kevin O'Leary accused Binance of deliberately crashing the FTX exchange
The Shark Tank star and lawmakers call for more regulation of digital assets and exchanges
Kevin O'Leary, a Canadian entrepreneur and a crypto industry player, has accused Binance of causing the FTX collapse. He alleged that Binance, the largest crypto exchange by trading volume, deliberately caused the collapse of FTX, another crypto exchange.
Since the FTX collapse, many insiders— including the founder, Sam Bankman-Fried, and other executives have been allegedly involved in the debacle. While investigations are ongoing to unravel every individual and situation leading to the incident, Kevin drops another "mysterious revelation."
In this article, we shall identify the details of the event leading to Kevin O'Leary's claim and other accusations on the alleged cause of the FTX collapse.
On the 14th of December, Kevin O'Leary appeared before the Senate Committee on Banking, Housing, and Urban Affairs. The lawmakers organized the hearing after the spectacular collapse of the FTX exchange— prompting the regulation of digital assets.
They titled the hearing "Crypto crash: why the FTX Bubble Burst and the Harm to Consumers."
Kevin O'Leary, an FTX investor, addressed the hearing. He said,
I have an opinion, not the records. One exchange put the other out of business, intentionally."
He said Binance's decision led to the crash of the FTX exchange.
Last month, the former's CEO Changpeng Zhao (CZ) revealed some exchange decisions. He said that the crypto exchange "would be selling the exchange's holdings of FTX's native token." Kevin O'Leary revealed that this move triggered a liquidity crisis prompting FTX to file for bankruptcy.
Furthermore, O'Leary concluded that the ecosystem needs stronger regulation. He noted that FTX-owned derivatives trading platform LedgerX was the "only entity that didn't go to zero" following the crash.
He said LedgerX did not crash alongside its parent platform because the Commodity Futures Trading Commission regulated it.
This is not the first time Binance has been accused of making a decision that crashed the FTX exchange.
In November, UK lawmakers accused it of deliberately sinking FTX. When one of its representatives appeared before the committee, the lawmaker asked if
Binance knew its actions that included unloading much of its FTT holdings on the market and agreeing to acquire FTX before backing out of a deal could lead to the collapse of FTX."
Similarly, Harriett Baldwin, the committee chairwoman, asked if the CEO, Changpeng Zhao "brought about the collapse of FTX?"
In response, Daniel Tinder, its vice president of governmental affairs of Europe, offered to send a formal response. He said the response would detail the events leading to the collapse and clarify Binance's stance on the issue.
The summary of the document read that
It is clear from the above that the causes of the collapse of FTX were the financial irregularities and possible fraud.."
Therefore, Binance has revealed that its decision did not cause the collapse. It is now opined that FTX irregularities and financial misappropriation caused the collapse.
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