The Binance cryptocurrency exchange’s abandoned takeover of rival platform FTX did not cause the high-profile collapse of the firm, a Binance executive has told MPs.
Daniel Trinder, the European head of government affairs at Binance told the Treasury Committee that the company “signed a letter of intent for due diligence” before a possible takeover, but pulled out when he said that process showed “something was very wrong”.
FTX, one of the world’s biggest crypto exchanges, filed for bankruptcy in the US last week after speculation around the financial health of the platform saw a mass of customers attempt to withdraw their funds from the exchange, leading to its collapse.
At one point, rival exchange Binance had looked into a buyout of the company, before it confirmed it would not pursue the deal and said it would offload its holdings of the FTX’s own digital currency, FTT, which some argue helped to seal the fate of a rival.
But Mr Trinder denied Binance had intentionally looked to cause the collapse.
He told MPs that Binance was simply “doing our due diligence on a potential transaction which we thought would be good for users”, but then did not go ahead with the deal and sold the FTT coins because of “the realisation that they were not worth the value (they were said to have)”.
He added it “certainly wasn’t the intent at all” to cause the company’s collapse.
Mr Trinder also said he believed the incident, which has shaken the cryptocurrency market and wiped billions off its value, had “set the industry back a couple of years”.
Ian Taylor, executive director of industry body CryptoUK, appearing alongside Mr Trinder at the committee, said it was still unclear how many UK consumers had been affected by the collapse, and that it showed regulation was needed for the sector to protect against “poor business practices”.
Tim Grant, from digital asset firm Galaxy, also told the committee that it was “unfair” to tar the whole crypto industry because of the actions of one “bad apple”.
He said the incident was a “governance problem” and not a “crypto problem”.