Responding to allegations by the United Kingdom Parliament’s Treasury Committee, Binance, the world’s largest crypto exchange by volume of trades, clarified that they did not intentionally damage competitor crypto exchange FTX.
While it was discovered that FTX had operated under some financial irregularities which led them to reduce their exposure significantly.
Daniel Trinder, Binance’s vice president of European government affairs, was questioned by members of the Parliament’s Treasury Committee during a hearing on November 14th regarding his company’s involvement in the FTX debacle.
The Committee also questioned Trinder about whether or not Binance was aware of the potential risk when it unloaded most of its FTT shares onto the market and agreed to purchase FTX but then backed out.
However, as a witness, Daniel Trinder testified in front of the Committee that his company did not want to start a collapse and that these measures were intended to safeguard its users. He also stated that the company would provide the required documentation as proof.
After pledging to do so during a hearing on Monday, the company delivered a five-page document outlining the series of events that led to the FTX collapse on November 15th to the Parliament’s Treasury Committee.
Additionally, according to a recent report, legislators in the U.S. are also investigating Binance’s culpability for FTX’s downfall. Republican Representative Patrick McHenry from North Carolina claimed that Congress has been watching this issue closely. Furthermore, it will likely be one of the main topics at a coming Congressional hearing.
Binance Five-Page Outline Of The FTX Crash
Per the document, CoinDesk first reported on the financial difficulties surrounding FTX on November 2nd, causing investors and holders of FTT to worry about the financial viability of FTX and its token, FTT.
Among the concerned ones to take notice of FTT was Binance’s CEO (CZ), who announced that he would sell off his remaining stocks shortly after the report came out.
The document claimed that:
The announcement referred to the fact that Binance would endeavour to liquidate its position in a way that minimised market impact, and that due to market conditions and limited liquidity, Binance expected this to take a few months to complete.
FTX’s CEO, Sam Bankman-Fried, contacted Changpeng Zhao to inquire about acquiring FTX; this resulted in both parties agreeing to enter into a non-binding letter of intent for FTX.
After that initial review of their finances and some news about regulatory investigations against FTX for misusing customer funds, they decided to pull out of the deal and declare it publicly.
In accordance with the document:
It is clear from the above that the causes of the collapse of FTX were the financial irregularities and possible fraud initially reported in the CoinDesk article on November 2nd, which presumably long predated that article.
Related Reading | Binance Scores FSP Approval To Offer Crypto Custody Services In Abu Dhabi