shark tank star Kevin O’Leary, also known as “Mr. Wonderful”, tested before the Senate Banking Committee on Wednesday and offered his take on the collapse of crypto-giant FTX – for which he was a paid spokesman.
The Canadian businessman began by detailing his arrangement with FTX and Sam Bankman-Fried as a paid spokesperson.
“The potential of these crypto technologies is astronomical in scale. In August of 2021, nearly three years after I started allocating capital to the crypto sector, I entered into an agreement with FTX to be a paid spokesperson,” O’Leary said, reading from a prepared statement.
“I was paid approximately 15 million for these services, plus approximately 3 million to cover the portion of the taxes due. Of the remaining amounts, approximately 1 million was invested in FTX equity and approximately 10 million in tokens held in FTX wallets. The equity is now most likely worthless and the accounts have been stripped of their assets,” he added, continuing:
And interestingly, financial records I’ve written all off to zero because I was a paid spokesperson, however. I never invested any capital from our partners or LPs in FTX. The capital loss was from an operating company that I had 100% ownership in. I’m using my own capital to pursue record recovery of the FTX accounts so I can conduct a forensic audit. The truth of this situation will be discovered by following the transaction trail after obtaining the records.
I’ve applied for membership on the FTX Creditors Committee in connection with the bankruptcy proceedings because I feel obligated to pursue the facts on behalf of all stakeholders and believe my perspective of this situation will be helpful to the other creditor committee members.
O’Leary publicly defended Bankman-Fried even after his company collapsed in mid-November, losing investors billions. The TV personality told host Ran Neuner he would still invest with Bankman-Fried after the collapse, and praised the ex-billionaire as a “good person” and “great trader.”
Sen. Pat Toomey (R-PA) asked O’Leary at the hearing, “Why do you believe FDX failed?”
“I have an opinion. I don’t have the records. Here it is. 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?’” O’Leary responded, singing a much different tune.
“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? And I said, ‘Sam, walking back 24 months. Tell me the use of proceeds of the assets of your company, where did you spend it?’” O’Leary continued, adding:
And then he told me about a transaction that occurred over the last 24 months, the repurchase of his shares from Binance, his competitor. I didn’t know this at the time, but at some point CZ or Binance, 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 was the number he was giving me at that time. Later in a substantive conversation, but 24 hours later, he told me he could have as much as $3 billion to buy back the shares from CZ. I asked him, ‘What would compel you to do that?’
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