'Mr. Wonderful' Goes Scorched Earth on FTX Founder During Congressional Hearing
What does a shark do when it catches a whiff of another shark’s blood? It devours the injured shark.
That’s basically what “Mr. Wonderful” Kevin O’Leary, one of the preeminent stars of investment show “Shark Tank,” did to Sam Bankman-Fried, the disgraced Democrat mega-donor and fraudster who used to run cryptocurrency exchange FTX.
O’Leary made several comments attacking Bankman-Fried during the Senate Banking Committee’s hearings on FTX’s downfall on Wednesday, and it was readily apparent that Mr. Wonderful’s mood was anything but.
You can watch the full hearing below:
“You’re an investor in FTX, and I know you’ve spoken frequently with Sam Bankman-Fried over an extended period of time,” said Patrick Toomey, the Pennsylvania Republican senator who is the ranking member of the Senate Banking Committee.
“Why do you believe FTX failed?” Toomey asked.
O’Leary then recounted how, after noticing his accounts were “stripped of all of their assets” and being unable to connect with any executives at FTX, he opted to reach out to Bankman-Fried directly.
“I simply called Sam Bankman-Fried, and said, ‘Where is the money, Sam?'” O’Leary said. After Bankman-Fried allegedly fed O’Leary a handful of excuses. Mr. Wonderful flipped the tables and simply asked to be walked through the last “24 months.”
“This is a simple case in my mind of, ‘Where did the money go?'” O’Leary said. “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?'”
O’Leary’s voice was noticeably raised when he recounted demanding to know “Where did you spend it?”
Mr. Wonderful then proceeded to recount how Bankman-Fried had sold 20 percent of his shares to direct crypto competitor Binance and its CEO Chanpeng Zhao (CZ, as O’Leary refers to him).
“I asked him, ‘What would compel you to do that?'” O’Leary recounted. “Why wouldn’t you keep your assets on your balance sheet, and why would you offer this to just one shareholder?”
O’Leary then revealed that an ensuing disagreement between Bankman-Fried and Zhao led to FTX buying back those shares at a remarkable loss, which mightily hastened FTX’s eventual collapse. O’Leary also accused Zhao of using some unsavory business tactics (like taking disputes to the public arena to put pressure on FTX) to get what he wanted.
“In my view, my personal opinion, these two behemoths that own the unregulated market together and grow these incredible businesses in terms of growth, were at war with each other,” O’Leary said. “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.”
O’Leary then took both Bankman-Fried and Zhao to task for those business dealings, going scorched earth enough to even invoke the name of disgraced American financier Bernie Madoff.
“Why should we care? Single reason: I’m a shareholder,” O’Leary said. “You tell me the two largest shareholders do a transaction together, that’s a related party transaction. I’m not sure that’s okay.
“Maybe I want a Madoff clawback on those proceeds. Maybe I want to pursue that.”
O’Leary was eventually cut off for going over his allotted time, but his point still stood. The Madoff “clawback” that O’Leary was referencing involved the landmark ruling that saw the Citigroup Inc. bank forced to return some of the money they had other legally reaped through Madoff’s ponzi scheme, on the grounds that there were enough “suspicious facts” that any reasonable person would follow up on them.
So not only did O’Leary expose some of Bankman-Fried’s most senseless and dumbest business transactions, he also is looking to get some of his money back, by any means necessary.
It’s often said that when it rains, it pours.
For Bankman-Fried, it looks like the rainstorm is just beginning.
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