Binance said it will submit evidence to UK lawmakers regarding discussions held about FTX.com when the two were in deal talks, as well as on its decision-making around the sale of FTX.com’s native token FTT.
(Bloomberg) — Binance said it will submit evidence to UK lawmakers regarding discussions held about FTX.com when the two were in deal talks, as well as on its decision-making around the sale of FTX.com’s native token FTT.
Daniel Trinder, Binance’s vice president of government affairs in Europe, said the company would provide the information to members of the UK Parliament’s Treasury Committee as part of the crypto exchange’s appearance as a witness in the group’s cryptoasset inquiry.
The committee’s chair Harriett Baldwin said that the group expects to receive evidence including internal correspondence and records about potential market consequences of Binance’s announced divestment of FTT, and about the due diligence carried out regarding the potential acquisition of FTX.
Trinder was grilled by lawmakers on Monday over the firm’s decision to announce a planned sale of more than $500 million in FTT on Nov. 6 — a move that caused trading volumes for the token to spike to their highest in more than a year. It also kickstarted the chain of events that led to FTX filing for bankruptcy five days later.
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When asked if it was apparent to Binance that selling its FTT pile would trigger FTX’s collapse, Trinder said that “wasn’t the intent at all”. He promised to deliver evidence to back up that claim by Nov. 15.
Once made public, the correspondence may answer swirling questions around whether Binance was aware of how its announcement could impact markets, and at the time, the fate of one of its closest rivals. It may also shed light on its later decision to extend a rescue offer to FTX two days later, as well as the state of FTX’s books at that time.
“Binance will provide the documents it committed to sharing,” a Binance spokesman said.
Due to several ongoing investigations against FTX in the US, Trinder said Binance may choose to redact certain information. Baldwin said at the hearing that the exchange would have to make clear why it is withholding any evidence.
Baldwin, chair of the committee, said at the hearing that Binance’s due diligence on FTX “surfaced an issue that triggered a sequence of events that led to the collapse of FTX.”
“You’ve got to admit that you were a player in that sequence of events,” she told Trinder. Binance’s intention was to protect its own users, Trinder replied.
The world’s largest crypto exchange has sought to portray itself as a unifying force for the crypto industry since FTX’s decline began, both as an olive branch to the failing platform and as a source of financial rescue for impacted projects.
Much of the industry has felt the brunt of FTX’s collapse, with major firms including Galaxy Digital, Wintermute and Crypto.com declaring tens of millions of dollars in exposure. A Nov. 10 balance sheet for FTX showed it had just $900 million in liquid assets against $9 billion in liabilities.
The fallout is likely to set back the sector several years, other witnesses told lawmakers at the inquiry.
“There were a lot of very experienced eyes on this. And what it tells us is that this was a bad actor, who was doing things in behind very closed doors that we had we had no view into as a broader group,” said Tim Grant, head of Europe for Galaxy Digital, which lost $77 million to FTX’s bankruptcy. “That’s not a crypto problem. That’s a governance problem.”
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