Political figures and members of the cryptocurrency community are currently questioning the credibility of Kevin O’Leary’s Congressional testimony, pointing to a multimillion dollar agreement between O’Leary and crypto exchange platform FTX last year that made O’Leary an FTX spokesperson.
On Wednesday, O'Leary, chairman of ETF indexing firm O’Shares, testified to the U.S. Senate Committee on Banking, Housing and Urban Affairs about cryptocurrency and the collapse of FTX, according to a transcript of the testimony. O'Leary explained that he was skeptical of the crypto sector until 2017, at which time he "completely reversed" his position and began investing in crypto technology and tokens. In 2021, O'Leary "entered into an agreement with FTX to be a paid spokesperson," for which he was "paid approximately $15 million for these services; plus approximately $3 million to cover a portion of the taxes due." O'Leary said he then invested $1 million in FTX equity and $10 million "in tokens held in FTX wallets." O'Leary concluded his testimony by saying "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."
Ignacio Cruz, a 2020 candidate for California's 19th Congressional District, called O'Leary's credibility into question because of O'Leary's relationship with FTX founder and CEO Sam Bankman-Fried.
"Why is @kevinolearytv a non stop hack for @SBF_FTX and trying to blame @cz_binance for the #FTX collapse? O'leary has no credibility and is trying to get #Congress to go after #Binance I hope the informed legislators see this," Cruz wrote in a Dec. 14 Twitter post.
Members of the crypto community including Layah Heilpern, author of "Undressing Bitcoin," have pointed to this payment as an explanation of why O'Leary has refrained from criticizing Bankman-Fried (SBF).
"Kevin O’Leary was paid $15 million to be a spokesperson for FTX. No wonder he has nothing but nice words to say about SBF even after the collapse. Money really does corrupt," Heilpern wrote in a Dec. 8 Twitter post.
One council member of Qi Capital, a venture capital firm that invests in blockchain and cryptocurrency, said in a Dec. 14 tweet, "The testimony from @kevinolearytv is an absolute joke!!! He puts all the blame for the #FTX collapse on @cz_binance and NONE on the criminal #SBF."
Cryptocurrency exchange platform FTX, once valued at $32 billion, filed for bankruptcy on Nov. 11, according to a report from the American Action Forum (AAF). Bankman-Fried, who founded and ran multiple crypto companies including FTX and Alameda Research, lost the majority of his approximately $26 billion in personal wealth in the collapse. More than $600 million worth of digital assets were reportedly stolen from FTX in the hours after the bankruptcy filings.
After Bankman-Fried was arrested in the Bahamas on Monday, Forbes obtained a copy of what he planned to say if he had had to testify in front of Congress. Binance CEO Changpeng Zhao, commonly referred to as CZ, was one of several individuals Bankman-Fried planned to blame for the collapse of FTX in his testimony. CZ had signaled in a tweet in early November that he was planning to sell all of Binance’s holdings of FTT, the native token of FTX, which Bankman-Fried believed prompted other FTT holders to sell off their tokens, triggering FTX's collapse.
CZ announced Binance's FTT selloff in response to CoinDesk leaking a balance sheet from Alameda Research, a crypto investment firm also founded by Bankman-Fried, which revealed that if the market value of FTT tokens were to drop, Alameda could face insolvency, NBC reported. After many FTT holders began selling their tokens, FTX cut off customers' ability to withdraw their money from the platform on Nov. 8. Over the next several days, multiple sources discovered the relationship between FTX and Alameda and the flow of improperly reported funds between the two companies.
The collapse of FTX has prompted investigations by the Department of Justice and the Securities and Exchange Commission to determine whether FTX used customers' funds improperly in an effort to prop up Alameda, the New York Times reported. John Jay Ray III, who took over FTX after Bankman-Fried resigned, described a "complete failure of corporate control" and “unacceptable management practices" in a court filing with the U.S. Bankruptcy Court for the District of Delaware. “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented," Ray wrote.
