Kevin O’Leary Points Finger At Binance For FTX Crash In Senate Testimony

Topline

Shark Tank investor Kevin O’Leary, formerly a spokesperson for the now bankrupt and disgraced cryptocurrency exchange FTX, continued to evangelize about the potential of cryptocurrencies during testimony before Congress – and touted a sympathetic theory on FTX’s collapse backed by its recently arrested founder Sam Bankman-Fried.

Kevin O’Leary testifies during a hearing before the Senate Banking, Housing, and Urban Affairs … [+] Committee on Wednesday.

Getty Images

Key Facts

“We need to get to the bottom of what happened at FTX, but we can’t let its collapse cause us to abandon the great promise and potential of crypto,” O’Leary concluded his written testimony for the Senate Committee on Banking, Housing and Urban Affairs’ hearing on FTX’s collapse and alleged fraud.

O’Leary later offered his own hypothesis on what caused FTX to file for bankruptcy last month, which sounded eerily similar to Bankman-Fried’s and did not mention the alleged fraudulent business practices and misuse of billions of dollars of customer funds that landed Bankman-Fried eight federal criminal charges this week.

FTX and its largest rival Binance “were at war with each other and one put the other out of business intentionally,” O’Leary opined, adding Binance is now an “unregulated global monopoly.”

Binance and its billionaire CEO Changpeng Zhao did play a role in FTX’s collapse—FTX’s bankruptcy came after its token FTT collapsed in value after Zhao said his firm sold all of its FTT holdings, and Zhao later backed out of plans to acquire FTX.

Zhao’s unloading of FTT and acquisition reversal may have accelerated FTX’s collapse, but there’s little evidence to back up O’Leary and Bankman-Fried’s assertion that FTX may have emerged unscathed, considering the mounting allegations FTX engaged in several illegal business practices.

Bankman-Fried told Forbes hours before his arrest Zhao “played” him and acted in bad faith.

Key Background

Bahamian authorities arrested Bankman-Fried late Monday, and prosecutors subsequently revealed charges including wire fraud and money laundering against the 30-year-old former billionaire. Bankman-Fried was scheduled to testify Tuesday before the House in a separate congressional hearing, but his appearance was canceled given he was in a Bahamian jail. He had planned to blame Zhao, predatory lawyers and other bad actors for FTX’s demise before lawmakers, according to a copy of his prepared written testimony obtained by Forbes. Nicknamed “Mr. Wonderful” on Shark Tank, O’Leary was one of FTX’s many celebrity endorsers and equity stakeholders, including athletes Tom Brady and Stephen Curry. O’Leary told Forbes last December crypto accounts for about 10.5% of his investing portfolio, with no token comprising more than 5% of his crypto holdings. The largest crypto token, bitcoin, is down more than 60% since that interview. Zhao attacked O’Leary last week over the latter’s ties with FTX, and Zhao said if O’Leary “is looking for someone to blame for the implosion of FTX, he should start by wagging his finger at his investment partner, Sam, and then perhaps at the man in the mirror.”

Big Number

About $15 million. That’s how much FTX paid O’Leary in endorsement money, according to O’Leary, but he doesn’t expect to see that money again given it was held in equity stakes in FTX and crypto tokens in wallets on FTX.

Crucial Quote

“I know about lying because as an actor I do it for a living,” Ben McKenzie, best known for his role on The O.C. and now for evangelizing about the risks of crypto, testified before the Senate panel on Wednesday.

Chief Critic

Billionaire Mark Cuban is far less forgiving than his Shark Tank counterpart toward Bankman-Fried, saying last month,”That’s somebody running a company that’s just dumb as f*ck and greedy.”