Bahamas rolls from the FTX collapse: Crypto should be our way out

Sam Bankman-Fried chose a piece of first-class real estate on the Bahamas to build the new headquarters of its rapidly growing cryptocurrency exchange FTX, and posed with a shovel next to the Prime Minister of the Caribbean Land in a joint hug of the enormous potential for digital assets.

Just seven months later, the spectacular collapse of FTX shock waves sent by an industry that promised to revolutionize finance, and the credibility of the Bahamas-which placed the crypto boom at the center of its economic strategy-shaken the digital-asset companies properly.

"crypto should be our way out. We could interact with the global economy in a way that we couldn't have before," said Stefen Deleveaux from Caribbean Blockchain Alliance in a restaurant by the sea on the north coast of the island group.

"A large part of my work was destroyed-and that is due to Sam Bankman-Fried."

The collapse of FTX, which was once estimated at $ 32 billion, has left great losses such as Sequoia Capital, together with possibly more than 1 million creditors. Many are ordinary investors who are attracted by the possibility of making a quick profit. The coastal location that should be the FTX headquarters is now abandoned, littered with rubble and overgrown hedges.

ftx recently came to the Bahamas and settled there a little more than a year ago after it moved from Hong Kong. This change was of central importance for the Bahamas crypto bet, since they tried to diversify from offshore banking, which largely shifted into competing jurisdiction such as the quays.

The Bahamas "searched for other options, and here came crypto," said Jack Blum, a defender who acts as a senior advisor to the tax justice Network, a representation of interests.

It turned out to be successful and contributed to promoting the advance of the island state for broader investments in digital assets. Just a few days before FTX's collapse, the competing stock exchange OKX announced that the Bahamas would be their new regional turnstile after receiving registration from their supervisory authorities.

in the same month in which the founder of FTX with Prime Minister Philip Davis made the groundbreaking ceremony, the company organized a generous crypto meeting in the country's Baha Mar Resort. The guest list was a "Who is who" list with names that contributed to helping Bankman-Fried to his status as a flag bearer of crypto, including Bill Clinton and Tony Blair as well as pop star Katy Perry and NFL legend Tom Brady.

"There had been big conferences before, but that was more than anything else," Deleveaux and found that the crypto crowd was the "golden children" of the country. "Everything they did looked incredibly professional," he said.

But in Nassau, the capital on the island of New Providence, where financiers meet with tourists who get out of one of the many cruise ships, a once promising crypto scene has hardly left any physical traces. This is partly because Bankman-Fried and his employees FTX from his penthouse in Albany, an exclusive luxury resort in the remote southwest of the island.

The resolution of FTX has put the Bahamas and the rulers there, who tried to distance themselves from the consequences, into a bright light. Davis defended the Securities Commission of the Bahamas, the country's highest supervisory authority last week, in a speech to the parliament and said that he had “no defects” in the regulatory approach of the island state.

But Bankman-Fried's successor at FTX, John Ray III, said that he had never experienced such a complete failure of corporate controls and such a complete lack of trustworthy financial information. Sam Trabucco, the former co-CEO of the FTX sister company Alameda Research, described the conditions in the penthouse in Albany, where work and leisure mixed freely, as "poisonous".

Bankman-Fried, who quickly developed into a leading villain in the industry, has repeatedly tried to explain himself on social media, but remains outside of the public. He did not respond to an interview request from the Financial Times.

ordinary Bahamas were faltered by the rapid turn of events. A local who worked in the Baha Mar Resort said he was still trying to find out how something that is going so well can crash so quickly.

John Christensen, an economist and specialist for offshore finances, was devastating about how FTX, in his view, was given free hand at work.

"[The Authorities] close your eyes from these things, it is a good business, everything seems to be going until it is no longer so. If the prime minister cannot see that a massive mistake happened during his term, he violates his duty," he said.

The desire to protect his reputation seems to be included in the closely connected communities of the Bahamas. Michael Pintard, Free National Movement leader, the most important opposition, said it was "completely too early" to say what effects the crypto regulation of the Bahamas could have.

Several Bahama -based law enforcement officers refused to comment on FTX or his founder. The Bahamas' Securities Commission declined an inquiry for an interview.

A Bahamaer who pushed an insight into the collapse of the FTX said that the island state had little desire to publicly criticize the authorities. "You could upset the wrong person and may not even notice how it affects you and your company," said the person.

Christiansen added: "If it is seen that the regulatory authority is trying to actively try to understand the business models and to consider the risks, then it is somehow regarded as 'hostile to business'."

But Clement Stanley, a taxi driver in the capital, criticized the operators of the Bahamas because they did not protect the nation's good reputation. He said the archipelago was the "crown jewel of the Caribbean". . . We have to protect this call at all costs. That is taught us as children. ”

His concern was the simple Bahamas, who, unlike Bankman-Fried, was never given a fair chance of success. The authorities do so "so much care in 'the little guy'," he noticed, but much less with the new crypto muffling.

"I wish you would give guys like me a chance," he said.