Kevin O’Leary, a well-known businessman, spoke in front of the U.S. Senate regarding the FTX hearing. He bad-mouthed the cryptocurrency exchange Binance and said that it caused the collapse of FTX on purpose.
Did Binance really destroy FTX?
FTX used to be one of the largest crypto exchanges in the world in terms of the number of clients and trading volume. However, there are several proofs that people behind the exchange behaved fraudulently, maliciously, and overleveraged their business. They were also undercollateralized.
Related article: Crypto outflows from exchanges continue, Binance suffers
The collapse of FTX made lawmakers think more than ever about how to regulate digital assets. O’Leary, who was a paid spokesperson and investor in FTX claimed Binance put the collapsed crypto exchange deliberately out of business.
"Binance is a massive unregulated global monopoly now" #FTXScandal #FTX #binance pic.twitter.com/wyu88N5aGw
— Investro.com (@investrocom) December 15, 2022
The largest cryptocurrency exchange in the world, Binance, was a key player in last month’s crash of FTX. Binance’s CEO, Changpeng Zhao (CZ), caused a liquidity problem when he revealed plans to liquidate the exchange’s supply of FTX’s native coin FTT. FTX filed for bankruptcy a few days later.
Fishy FTX accounting
The crash of FTX naturally prompted the fall of other businesses that had exposure to the bankrupt crypt exchange. LedgerX, a derivatives trading platform owned by FTX, was the only entity that didn’t go to zero after the crash. It was regulated by the Commodity Futures Trading Commission, which is an argument O’Leary used to advocate for stricter regulation in the crypto space.
Sam Bankman-Fried, the company’s original CEO and founder, was detained in The Bahamas a few days earlier at the request of American authorities. He is currently being investigated and faces several criminal counts.
Also read: Stablecoins vs CBDCs – what’s the difference?
Whether the claims of O’Leary are true or false, it’s a good sign that FTX is out of business for several reasons. It was mishandling customers’ funds, using them for bad trading techniques or buying properties in the Bahamas. Their accounting was done through Quickbooks, which as the current CEO of FTX John Ray III said, is not for multi-billion dollar companies.
"Quickbooks. A very nice tool. Just not for a multi-billion dollar company." pic.twitter.com/8LoCMOnX2D
— Investro.com (@investrocom) December 15, 2022
Final thoughts
The crash of FTX and other similar businesses is a great thing for crypto in the long run, as the toxic projects leave the space and leave more room for the ones with good intentions. Binance is truly one of the biggest market players, but Huobi, KuCoin, OKX, and countless others would have to collapse as well for Binance to become a monopoly.
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