FTX Spokesman, Shark Tank Co-Host Kevin O’Leary Blames Competitor for Firm’s Collapse in Senate Hearing

Kevin O’Leary, an investor and judge on Shark Tank who was paid $15 million to act as a spokesman for FTX, testified before the Senate Banking Committee on Wednesday about the crypto exchange’s collapse.

O’Leary has said as an investor he lost all of the money he was paid to act as a spokesman for the exchange, which fell apart in November, costing investors millions in losses.

FTX founder Sam Bankman-Fried was recently arrested on charges that he misled investors and mishandled billions in funds. He has been accused of misusing customer funds deposited with FTX to boost his crypto hedge fund, Alameda Research.

O’Leary was among a group of celebrities, including Tom Brady and Larry David, who were sued by FTX investors for their promotion of the firm. He said he put roughly $9.7 million into crypto from the $15 million deal. The rest went to taxes and agent fees, he said.

Senator Pat Toomey (R., Pa.) asked O’Leary on Wednesday why he believes FTX failed.

O’Leary recounted reaching out to Bankman-Fried after the investor discovered his accounts were stripped of all of their assets and 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?'” O’Leary testified.

He said he then discovered that Bankman-Fried had spent between $2 billion and $3 billion to repurchase shares from Binance CEO Changpeng Zhao, who held 20 percent ownership in Bankman-Fried’s firm.

O’Leary said he asked Bankman-Fried what would compel him to do that. The founder replied that Zhao would not comply with regulators’ requests for data that would allow the firm to get licensed. The founder allegedly told O’Leary “the only option” FTX had was to buy Zhao out at an “extraordinary valuation” of close to $32 billion.

“That stripped the balance sheet of assets,” O’Leary said. “You ask me why it went bankrupt. Go to the last week. All of a sudden in social media, CZ is asking for another $500 million. He wants to do a block trade of FTT, or the proprietary token of FTX. He wants to convert it back to fiat. Why would you put that out there? You know it’s going to push down the value of that coin dramatically. That’s exactly what happened.”

O’Leary said the two “behemoths that own the unregulated market together” were at “war with each other and one put the other out of business intentionally.”

“Now, maybe there’s nothing wrong with that,” he said. “Maybe there’s nothing wrong with love and war. But Binance is a massive unregulated global monopoly now. They put FTX out of business.”

Binance was founded in China but quickly moved out of the country when the government announced it would impose regulations on cryptocurrency trading.

Despite the company’s founding in Shanghai, Zhao has said it “couldn’t be further from the truth” that Binance is run by the Chinese Communist Party or is a “Chinese spy.” Zhao was born in China but is a naturalized Canadian citizen.

Zhao argued in a blog post that it would be impossible for Binance to be a Chinese company today as Binance and other crypto exchanges “have been designated a criminal entity in China.”