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FTX shows Bahamas can’t ‘live or die’ by one investor

Governance reformers are arguing that FTX’s implosion further reinforces that there is “no silver bullet to solve our economic growth issues coming out of Dorian and COVID-19”.

Matt Aubry, the Organisation for Responsible Governance’s (ORG) executive director, told Tribune Business that the crypto currency exchange’s spectacular collapse again showed the danger for The Bahamas in relying upon one major foreign investor to serve as “a game changer”.

Speaking before Sam Bankman-Fried, FTX’s embattled founder, waived his right to fight extradition to the US after a court hearing that some foreign media described as “a farce”, the ORG chief argued that this nation should have learnt that lesson when Baha Mar fell into Chapter 11 bankruptcy protection and subsequent Bahamian legal proceedings that delayed its completion and opening for some two years.

Mr Aubry also suggested to this newspaper that the laser-like focus successive administrations have placed on attracting multi-million foreign direct investment (FDI) projects has served to distract attention from building greater resilience in the domestic Bahamian economy, and enabling small businesses to scale up so they can become mid-sized and larger enterprises.

“I think it highlights a couple of things,” he explained of the FTX situation. “We’ve seen this before in The Bahamas, building out foreign direct investment as the next big thing. We’ve seen projects like Baha Mar have hiccups where entities do not manifest themselves exactly as intended, but the presentation the Government puts out; it puts more emphasis on whatever entities are coming in and bringing investment to move forward.

“The big lesson coming from this is there’s no silver bullet to solve our economic growth issues coming out of Dorian and COVID. We need to spend time building local economic development, building more resilience to external shocks, whether it’s things like this, COVID and hurricanes coming in here.

“We need to nurture scalable small businesses that move into medium-sized businesses, that move into larger businesses. It reinforces this need to have solid, diverse, inclusive economic growth. Our focus on one big project coming in and changing the game takes our focus off building slow and steady in other spaces.”

Arguing that the Government’s latest public procurement reforms, which are designed to create a fair, transparent and competitive tendering process for all public sector contracts and counter the decades-old system of political patronage, is one such area that requires sustained attention, Mr Aubry said initiatives that foster small and local business growth will better enable the economy to withstand FTX-style collapses.

“If a problem like FTX comes around, it doesn’t send such different types of shocks through the system,” he explained. “It’s not going to move our attention off building or with what’s happening with small local businesses.”

The ORG chief agreed with Prime Minister Philip Davis, in an assessment that was also backed by John Ray, FTX’s now-US chief who has chosen to frequently blast The Bahamas in public, that the crypto currency exchange’s implosion would have occurred wherever it was domiciled.

“This is something that could have happened in any jurisdiction,” Mr Aubry argued. “We are dealing with a new industry. It’s important to keep this in context. We’ve seen other large scale businesses go down through poor administration or lack of appropriate corporate governance structures. That’s not the Government’s responsibility to ensure an entity like that is going to be successful.

“It’s important to remember, first and foremost, that The Bahamas should never expect to live or die by one project or one entity like that. It does raise a number of things. From a regulatory standpoint specifically related to crypto, the industry as we look at it is this is new territory...

“If we are going to position ourselves to take advantage of it, we have to ensure that as entities come there’s a better sense of what things look like and what framework we need for the build-out of this industry. We now have a bit of real life experience in what can go wrong.”

Comments

ExposedU2C 1 year, 5 months ago

This comment was removed by the site staff for violation of the usage agreement.

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killemwitdakno 1 year, 5 months ago

He's sabotaged. CZ wanted him out and bought the company he was going to buy.

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ExposedU2C 1 year, 5 months ago

Rubbish. SBF is nothing but a common embezzler who thought he could buy immunity from stealing from others by showering corrupt and politicians and greedy members of the elitist political ruling class with a good portion of what he stole.

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killemwitdakno 1 year, 5 months ago

I dare all crypto customers to do a Christmas day bank run to test if their funds are truly there atm.

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ExposedU2C 1 year, 5 months ago

Tether is next in line behind FTX in the blowing-up Kryptonite world.

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killemwitdakno 1 year, 5 months ago

This was really for Freeport. He most likely wouldn't have gotten in trouble there under the Port's supervision. There's nothing to be distracted by. People mind their business, aren't mooching, or viscously petty.

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killemwitdakno 1 year, 5 months ago

A tech hub was the biggest resilience and we are (were) already a financial market but ppl were sour about the major win merely because they thought they couldn't invest ( when the bigger loss is all the former multi-national multi-billion dollar corporations not listed on BSIX ) and foolishly want to gamble.

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killemwitdakno 1 year, 5 months ago

Was he not consulted by Izmirlian yet?

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killemwitdakno 1 year, 5 months ago

THIS IS MERELY COMPETITORS AND JURISDICTIONS FIGHTING FOR KEEPS. IMF never wants 3rd world to pay off it's bills. US doesn't want to lose its crypto companies from US Puerto Rico. Why do you think that of all the "derisking" these groups forced causing OUR BANKS TO LEAVE, they weren't doing much risk management with crypto? Obviously their honey pot. At least the president purchases are exposed and exposes the true intentions (beyond hypocracy) of so-called financial transparency.

At this point, they (global financial regulators) honestly owe us for the market attacks (blacklisting, derisking) back then. IT WAS ALL JUST TO DO THE SAME SERVICES THEMSELVES. The same Binance strategy.

The crooks and economic hitman are the regulators. Why are we forgetting this. Clear as day with FTX now. So was Nygard as a regulator wannabe.

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killemwitdakno 1 year, 5 months ago

They're smearing because they want our potential customers.

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Maximilianotto 1 year, 5 months ago

Very easy - the government should not involve in any FDI - let the market speak and don’t get a brown nose or black eyes - and stay away of groundbreaking ceremonies. But greed leads to interference in private businesses and ultimately the government will be involved as defendants in $10,000,000,000+ damages lawsuits for corruption and tortious interference.

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