Lawmakers in the UK are probing the role of Binance in the collapse of FTX. They are also collecting details of internal discussions and documents relating to its aborted plan to purchase FTX and the sale of the FTX exchange token — FTT.
The UK Parliament’s Treasury Committee sought answers why Binance revealed the proposed sale of FTT tokens worth $583 million on November 6. Did it know the move could trigger FTX’s collapse?
Daniel Trinder, Vice-President of Government Affairs Europe at Binance, appeared before the Committee on Monday and deposed that Binance had no hand in FTX’s collapse and all decisions were taken to protect its users.
Treasury Committee Chair Harriett Baldwin said Binance needs to explain the reason behind withholding certain information. She added that the exchange would have to share information on the “sequence of events” that led to FTX’s demise.
Trinder in his statements attributed the failure of FTX as a reflection of bad governance than flaws in the decentralized finance technology.
Binance, after indicating its intentions to “fully acquire” FTX on November 8 backed out on November 9, citing mismanagement of customer funds and the intense regulatory scrutiny on the exchange.
Following this, FTX and 130 affiliated companies, filed for Chapter 11 bankruptcy.
Ian Taylor, CEO of the trade organization CryptoUK, also shared his views with the panel. He said the current turmoil shows, “We need some regulation around these central actors, such as audits, proof of reserves on assets and liabilities.”
What was witnessed in FTX is the organization using its clients’ assets to go and then taking risks and leverage to lend out. Such a practice the industry does not want to see, Taylor added.
