The UK Government began an inquiry into the crypto assets industry yesterday. Officials from the likes of Binance and Ripple were asked if crypto could be compared to 17th-century tulip mania and if Binance knew its relationship with FTX would lead to the exchange’s collapse.
Launched in July, the UK Parliament Treasury Committee is probing the “risks and opportunities associated with the use of crypto-assets, their impact on social inclusivity, and the possible need for regulatory change in the future.”
As part of the inquiry, Ripple’s head of policy, Susan Friedman, Binance’s Vice president of government affairs, Daniel Trinder, Galaxy Digital’s head of Europe, Tim Grant, and CryptoUK’s executive director, Ian Taylor, were all quizzed about crypto volatility and further regulation.
The committee asked Trinder about Binance and its involvement with FTX, specifically if the company knew that the unloading of FTT tokens and its backing out of the FTX deal would cause the exchange to collapse.
Trinder denied the allegations and assured the committee that he could provide correspondence documents to prove that this wasn’t Binance’s intention.
Indeed, when asked whether it was Binance CEO Changpeng Zhao who brought about FTX’s downfall, Trinder replied:
“No, it wasn’t at all. He was approached about rescuing FTX, we signed a letter of intent for due diligence, we started that due diligence process and realized something was very wrong and we pulled out,” (our emphasis).
Then when pushed on whether Binance had been “a player” in the sequence of events that brought down its rival, Trinder responded:
“We thought it [Binance bailing out FTX] would be good for users more generally not just users on FTX but our users because some people would be with more than one exchange.
“… I can forward the committee the correspondence on that if it would help but that wasn’t the intent at all behind the trigger of the sale of the FTT coins.”
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Crypto execs call for clarity
MPs also asked the group how anyone can trust putting their money into a crypto exchange since FTX’s collapse.
In response, Ian Taylor said: “We need more clarity, we need auditing, we need to make sure that customer assets aren’t used in the way that this was used with,” (our emphasis).
On the topic of regulation, Friedman told MPs, “I think, without saying we’re suggesting that the UK should adopt MiCA wholesale, there are portions of that regulation that I think formulate best practice, which certainly can be incorporated and provide the sort of consumer protection that this committee is looking or speaking to now.”
The panel could not provide any answers yet as to how many customers in the UK lost funds in the FTX collapse.