Kevin O’Leary Doesn’t Rule Out Criminal Charges Against Binance

Kevin O’Leary, who said the Securities and Exchange Commission made some “serious” allegations in a 136-page charging document issued against Binance on June 5, told Cointelegraph in an interview that he believes Founder and CEO Changpeng Zhao is “tough” to smear.

O’Leary, a venture capitalist and CNBC personality known more colorfully as “Mr.” amazing,” was an investor in crypto exchange FTX before its November collapse, and has been open about Garland $15 million from his gig as a paid spokesperson for the company.

Some observers attributed the failure of FTX to the events that followed a Twitter exchange between the 31-year-old founder and CEO, Sam Bankman-Fried, and Binance CEO Changpeng “CZ” Zhao – who briefly closed amid FTX’s collapse. suggested that he was open to exiting the company. But he quickly dismissed the prospect of making an offer to the bankman—Fried’s chagrin—and, perhaps, O’Leary’s bank account.

you won, @cz_binance,

There’s no need to lie about purchases anymore.

We started the conversation about buying you, and we decided to do it because it was important to our business.

And while I was frustrated by your ‘negotiating’ tactics, I still chose to do it.

— SBF (@SBF_FTX) December 9, 2022

O’Leary nevertheless said he felt sympathy for CZ, 46, who has been targeted by the SEC with allegations that he misled customer funds by moving them between entities he controlled — including Binance and Merritt Peak. North of $20 billion included between a company called ,

“They’re going after CZ personally,” O’Leary said. “It’s tough. I mean, you have to show some compassion for her.

Cointelegraph: What should investors make of this lawsuit? Is it going to cripple the market? Do the regulators have a case?

Kevin O’Leary: If you think about why the crypto market is “stuck”, why it is not moving, it is because there is no new money coming into it. There is no institutional capital. (…) And so, when you see a constant flood of litigation against exchanges and charges by regulators – it just scares away institutional money.

I think everyone’s figured it out, except for the regulators themselves — and the legislators and lawmakers. They are tired of the evil nature of this place. They’re sick and tired of hearing when the next guy blows up $6 billion. His constituencies are crazy. They are tired of it.

There’s No Emotional Support On The Hill (For Crypto) Now As When It Was Nascent Industry, there was a lot of promise – but now it’s just fraud, and now it’s just opacity and lack of transparency and allegations of mixing up customer accounts and all these things. Taking this crypto “Mr. Wonderful ”three years, and so everyone is tired of it. They want to turn the page. We are watching this movie every few months now.

Connected: The outcome of the SBF prosecution may determine how the IRS treats your FTX losses.

So, if finance is the last shoe to drop, so be it. Let’s get this over with, and we can start anew. I think there is a real quandary in the institutional market today about turning the page. If you have to sacrifice some rogue operators, if these people are going to be charged and prosecuted, fine. I mean, we have to move on.

CT: We are seeing a lot of allegations against Binance in terms of building up trading volume against FTX, encouraging VIP clients to bypass them. Know the needs of your customers With the VPN, and transferring $20 billion of customer funds to another entity called Merit Peak. And its chief compliance officer even said that at one point – according to the SEC – it was “operating as an unlicensed securities exchange in the United States.” Why do you think this is leading to criminal charges?

KO: This is an unknown. But you have seen this movie before. just last November, you saw this movie – they named it ftx day, it is FTX II, I mean, I don’t know. Nobody knows. This is all speculation, but these are serious allegations, and there are a lot of them. If any of these allegations are true, then this is a very difficult place.

Also, they are going after CZ personally. This is difficult. I mean, you have to show some compassion for her. He is the founder of the world’s largest exchange. But I think when the No. 1 regulator on earth has come up with and filed these charges, the jurisdiction is going to run out of oxygen to operate on it. This is not a good situation. There is no good news here. I don’t know how one can make better news than this.

CT: There are two components to the case. Obviously, there is an allegation of misconduct. The second one is the more basic element needed for the SEC to pursue the case – the idea that Binance is a broker-dealer and clearing agency for securities. To that end, it alleges that some of the larger cryptocurrencies are securities, such as Cardano’s ADA, Solana’s SOL, and Algorand’s ALGO. How do you feel about anything other than bitcoin and ether? Would you invest in them at this time?

Connected: Barry Silbert remains silent as Genesis goes up in flames

KO: Yes. It doesn’t change my investment thesis about crypto. In fact, it encourages me that we will soon reach an endpoint in terms of getting the infrastructure in place to get regulation and integrate it with the financial services of the world. I find this a very encouraging development because we really have to turn the page. I have said it many times. But I am an investor in Polygon. I am an investor in Mysten (Labs) and (its token) Sui. I am an investor in bitcoin and ethereum and many more.

I think the promise of reforming financial services is very intriguing and has a lot of potential. I am an investor in Circle and a user of it. These are all good developments. What’s stopping us is all these allegations of rogue operators and lack of transparency. (…) These allegations, to be honest with you – it’s getting boring. I mean, this is just getting boring.

I’m sick of this. I think most institutional investors are tired of it. It’s just boring, and I want to watch something else now. And so, who cares if we have to sacrifice some pioneers? I mean, it’s not like they didn’t see it coming. I mean, it’s clear what’s happening here. And I guess, at this point, let’s move on.

CT: Do you see any light of day between the SEC’s case against Coinbase and its case against Binance?

KO: Fees differ. Coinbase has a different position. It is a public company. Its market cap was decimated (by the SEC suit), and it looks like management is looking to take on the SEC again and again.

I think at this point, if you’re a shareholder in that company, you might want to make some changes. I don’t think it’s working as a strategy. (…) I am not optimistic for the management team there.

I think the winds of change are about to blow through that boardroom, and maybe that’s a good thing. I think investors are done with it. There comes a point where you just have to realize that you are banging your head against a brick wall and you have to resolve your issues with your regulator. You can’t do this again and again. The definition of insanity is doing the same thing over and over again and expecting different results. At this point, I think it’s over for them too.

I think we should thank the founders of that company. They were pioneers, but they clearly do not have the maturity or skill set to operate in a regulated environment. (…) I think at this point, they have some work to do.

CT: Do you think there is room for FTX to return to polite society or a more ‘normal’ look after this?

KO: Well, the narrative on FTX is that it is in a recovery phase. Reportedly, $7.2 billion of the $8 billion (that is) has been found. This is very encouraging. And so I think we’ll want to go through the process of distributing that to shareholders and account holders and everything else.

KO: I think, you know, the question of the allegations coming to equity that was brought up in the Senate hearings … Speculating – and I’m one of the people who speculated – whether Binance intentionally bankrupted FTX Was. A balance sheet of $2 billion in US cash and 580 million in FTT tokens to drive your competitor out of business so they can be a global monopoly? That is a scenario. Who knows if this is true? But I think by influencing these charges and going into discovery, we’re going to learn a lot.

But then again, that’s the past. I mean, you have to think about it, well, it’s going to go on and whatever happens, the finances happen, but it’s not the future. That is not the future. There is great promise of the future. I’m about to start investing on regulated exchanges around the world because all these accounts have to go somewhere and they want to go to a place where they are allowed to exist without being constantly threatened by regulators.

I have already invested in WonderFi up in Canada, that is Bitbuy. I’m looking at a deal in Abu Dhabi. I’m looking in London. There are a lot of regulated exchanges that never had a chance to make money because they were being beaten by global giants that had no rules and regulations and no cost of compliance. He is shifting now. I think it’s going to be interesting. I think you will see the value of these exchanges start to increase in 24 months.

This interview was condensed for length and clarity.