US Congress to Investigate Binance Role in FTX Collapse: Report

Binance has constantly denied that it deliberately sought to sink competitor crypto exchange FTX.

Written by Shomik Sen Bhattacharjee, Edited by Siddharth Suvarna | Updated: 18 November 2022 13:55 IST

Photo Credit: Unsplash/ Vadim Artyukhin

FTX collapsed from being a major crypto exchange to filing for bankruptcy last week

Highlights

Binance claims FTX's downfall was its financial irregularities
Regulators across the work have opened investigations on FTX
It is unclear if SBF will participate in December's congressional hearing

Binance, the leading digital asset exchange by daily average traded volume, is also under global regulatory scrutiny following the sudden collapse of the FTX cryptocurrency exchange and its subsidiaries. While speaking to reporters, Republican Patrick McHenry, a senior House Republican, confirmed that Binance's role in the FTX collapse is under congressional scrutiny. Binance CEO Changpeng Zhao aka CZ has, however, has come out and vehemently denied taking part in the FTX collapse, citing that his exchange is a victim of the situation.

As stated by Republican Patrick McHenry, speaking to The Block, Binance's participation in the FTX's collapse will be discussed at a hearing in December.

Binance, meanwhile, has time and again argued that the cause of FTX's collapse was ‘financial irregularities and possible fraud' in written comments to a UK parliamentary committee. Notably, the UK counterparts wanted to know what role Binance played in the FTX collapse.

While the collapse of a major cryptocurrency exchange is not news in the industry, FTX's failure has pricked regulators' comfort worldwide. Moreover, FTX was legally regulated through an operation license in several jurisdictions, including Australia, the US, and Singapore, among others. As such, millions of people globally have been psychologically affected by the sudden collapse of FTX and Alameda.

The mystery surrounding Sam Bankman-Fried escalated after $450 million (roughly Rs. 3,653 crore) worth of digital assets belonging to FTX customers vanished a few hours before the company filed for chapter 11 bankruptcy.

McHenry further told The Block that the FTX collapse had expedited the need to regulate centralized exchanges and the digital economy.

"We've had these conversations about what I think are the second-, third-, and fourth-order decisions that we have to make as a committee to bring clarity,” McHenry said. “So I believe the first step here is you have to have clarity around what is a digital asset. And that means making a clear legal distinction here," said McHenry.

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