FTX Hearing: Kevin O’Leary Reveals Phone Conversation With Sam Bankman-Fried After Accounts Were Wiped

Shark Tank star Kevin O’Leary has revealed a phone conversation he had with former FTX CEO Sam Bankman-Fried after the crypto exchange lost its customers’ funds.

Speaking under oath in front of the U.S. House of Representatives Financial Services Committee, the former FTX spokesperson details the conversation he had with Bankman-Fried last month after he realized his funds were no longer in his FTX account.

Says O’Leary,

“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? He said he had been refused access to the servers, he no longer knew. I said ‘okay let’s step back’. This is a simple case in my mind of ‘where did the money go?’ I said ‘Sam, walk me back 24 months, tell me the use of proceeds of the assets of your company. Where did you spend it?’”

According to the venture capitalist, Bankman-Fried disclosed to him that Binance had purchased a 20% stake in FTX in the past and he repurchased those shares from Binance for a price of between $2-$3 billion.

“I didn’t know this at the time, but at some point, [Changpeng Zhao], who runs Binance, purchased 20% ownership in Sam Bankman-Fried’s firm for seed stock, and then over time – and I asked him ‘what would compel you to spend $2 billion?… Later, in a subsequent conversation about 24 hours later, he told me it could have been as much as $3 billion to buy back the shares from [Zhao]. I asked him ‘what would compel you to do that? Why wouldn’t you keep your assets on your balance sheet and why would you offer this to just one shareholder?’”

According to O’Leary, Bankman-Fried said that Zhao wouldn’t give the necessary regulatory data from the relevant jurisdictions to FTX, forcing the firm to buy out Binance, leading to a huge hit to its balance sheet.

“Apparently, according to Sam Bankman-Fried, [Zhao] would not comply with the regulators’ requests in these different jurisdictions to provide the data that would clear them for a license. He withheld it… the only option the management and Sam Bankman-Fried had was to buy him out at an extraordinary valuation… that stripped the balance sheet of assets.”

From O’leary’s perspective, the collapse of FTX was largely triggered by the actions of Binance in a potential act of industrial competition.

“In my view, my personal opinion, these two behemoths that own the unregulated market together and grew 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. They put FTX out of business.”

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