Binance’s role in FTX collapse unclear to UK lawmakers: Bloomberg

Quick Take

  • Members of the UK parliament committee investigating the collapse of FTX are not satisfied with Binance’s cooperation thus far, Bloomberg reports.
  • The alleged lack of transparency from Binance in the inquiry may have repercussions on upcoming UK crypto regulations.

UK lawmakers are not convinced by the evidence Binance provided to understand its role in the collapse of FTX, according to a member of Parliament. 

Binance sent answers to questions from the UK’s parliamentary committee investigating the downfall of FTX following a hearing on Monday, including on its role in the collapse of FTX. FTX was a major competitor of Binance's prior to its failure and subsequent bankruptcy. 

“It doesn’t really give us the real background detail,” Alison Thewliss, a member of the Treasury Committee, said in a Bloomberg interview. “I’m sure the committee will be asking more questions to get to the details of what happened here, because there are wider implications for this collapse and for the crypto sector as a whole.”

In response to the question of what role it played in FTX's collapse, Binance shared a series of news articles since the catalytic leak incriminating FTX for mishandling its funds on Nov. 2. The Treasury Committee reportedly expected to review Binance's internal records, including the decision to unload its holding of FTT, FTX’s native token. 

“We don’t have much ability to push for more than we’ve received,” Treasury Committee Harriett Baldwin said in the interview.

The committee’s recommendations for crypto regulations in the UK based on the inquiry into Binance and FTX will be impacted, Thewliss said in the Bloomberg report.

UK policymakers are working on more comprehensive rules for digital assets. The national regulator, the Financial Conduct Authority, is currently responsible for licensing crypto firms based on anti-money laundering compliance. With the new laws in the works, the FCA will have broader control over crypto assets. 

Binance is also under scrutiny in the U.S., where the House Financial Services Committee will hold a December hearing on FTX's downfall and the state of the crypto industry. 

Binance and the UK Treasury Committee have been contacted for further comment. 

Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.

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