Bahamian regulator probing FTX woes


Tribune Business Editor


The Securities Commission was yesterday investigating the crisis that has left The Bahamas’ flagship digital assets investor on the brink of collapse after a rival crypto currency exchange walked away from a rescue deal.

Christina Rolle, the regulator’s executive director, could not be reached for comment but well-placed Tribune Business sources confirmed it was “very closely monitoring and investigating” the situation that at press time last night appeared to have left FTX’s continued existence - and multi-million dollar Bahamas expansion plans - in ever-growing peril.

FTX Digital Markets, one of the crypto currency exchange’s subsidiaries, is a Securities Commission licensee and Digital Assets and Registered Exchanges (DARE) Act registrant. This is what brings it under the Bahamian regulator’s purview after a day of fast-paced developments that saw rival exchange, Binance, walk away from acquiring FTX in a deal that was effectively a bail-out designed to alleviate the latter’s liquidity crisis.

Binance and its chief executive, Changpeng Zhao (CZ), were said to have pulled out of the purchase after becoming spooked by reports suggesting that FTX was under investigation by US regulators and that it had allegedly mishandled customer funds.

“As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided we will not pursue the potential acquisition of FTX.com,” Binance said in a statement. The move plunged global digital asset and crypto currency markets into fresh turmoil, and raised increasing questions over FTX, whether it can be rescued, and the future of both itself and founder, Sam Bankman-Fried.

Bitcoin’s valuation fell more than 15 percent after Binance pulled out of the deal, while cryptocurrency exchange Coinbase fell by more than 9.5 percent. Binance’s withdrawal came after Reuters reported the US Securities & Exchange Commission (SEC) was investigating FTX’s handling of customer funds and its crypto-lending activities, especially whether it had kept customer assets separate from its own and if it had traded against clients.

The Bahamas was yesterday urged to quickly “learn any lessons” necessary as a result of FTX’s woes, including strengthening the DARE Act and the overall digital assets regulatory framework to better protect investors from similar situations that may arise in the future.

While there was growing consensus that FTX’s potential collapse will not cause The Bahamas any lasting reputational damage, or harm this nation’s ambitions to establish itself as a digital assets hub for the Caribbean and wider Latin American region, there are a number of short-term impacts in a worst-case scenario if the crypto currency exchange does not survive.

Besides questions over whether FTX’s plans for a $60m West Bay Street headquarters at Bayside Executive Park, complete with a 700-strong workforce and some 100 Bahamians trained in crypto currency, will ever begin construction, there are also implications for the Government’s ‘blue carbon credit’ ambitions.

Prime Minister Philip Davis KC previously said his administration was working with FTX to structure The Bahamas’ blue carbon credits, derived from its seagrass and mangrove carbon sinks, and exploring the creation of a carbon credit exchange with it where these securities could be traded. That work is now likely to be interrupted at the very least, and the Government may need to seek out a new partner.

FTX’s brand was also closely tied to this nation by virtue of the Crypto Bahamas conference it organised, and held, in this nation earlier this year at Baha Mar. This brought many of the global digital assets industry’s senior executives and thinkers to The Bahamas, and a repeat was scheduled for 2023. The crypto exchange was also the flagship, or poster boy, investor frequently marketed by The Bahamas to entice other digital assets players to the country.

Besides its multiple contributions to non-profits, charities and good causes, all of which may now dry up, FTX and its executives were also big purchasers and leasers of high-end New Providence real estate. John Christie, HG Christie’s president and managing broker, told Tribune Business he and other realtors are “not really sure at this point” what impact its woes will have on real estate availability and prices.

Describing it as “a very complicated situation”, Mr Christie said it was unclear whether FTX had moved to sell any of its New Providence real estate holdings in a bid to generate desperately-needed cash and liquidity. There was also the possibility that these assets could become tied-up in a liquidation, or receivership, should the crypto exchange prove beyond rescuing.

“The bottom line is that it’s too early to tell but we are keeping a close eye on it,” Mr Christie said. “I think they bought most of their stuff, but if people are leaving and leases are broken that could affect property values for rental sales. Most if the things I know about have been bought rather than leased.

“I’m sure it will have an effect on the market somehow, some way. We just don’t know what and how fast it will be. We’ll be watching it closely. It’s not good.”

Meanwhile, accountant John Bain, who previously said The Bahamas’ entry into the digital assets space prompted him to reunite with Philip Galanis some ten years after they went their separate ways, told Tribune Business that FTX’s travails were likely to prove a short-term “blip” rather than inflict any lasting damage on the country’s digital assets hub ambitions or the DARE Act.

“That is so fluid right now,” he added of the turbulence surrounding FTX. “There’s an immediate effect on the local economy. FTX was a big payer, and spent a lot of money donating to charities and helping a lot of people. I’m shocked it happened the way it did. There was some liquidity problem at FTX.”

Comparing the digital assets industry to the early days of banking, Mr Bain said The Bahamas may have to look at further upgrading the DARE Act and other aspects of its regulatory regime to better protect investors and prevent similar problems from occurring in future.

“This is a brand new, innovative industry and we’re still coming up with a lot of the infrastructure and regulations, which may not have been solidified,” he added. “It’s unfortunate it’s happened. If we look at amending our legislation, we must be aware these things can happen. It’s a lesson for us.

“I don’t think it will have a permanent effect, but there will be ramifications in the short-term for The Bahamas, for the Bahamians who got jobs with them, who rented apartments and houses to them. There will be short-term effects. I don’t think there will be a long-term effect. It shouldn’t have an effect. On a long-term basis it will be a blip. Sometimes when you’re starting out establishing a new industry, something happens and you have to be able to deal with it.”

FTX, in a notice on its website last night, said: “FTX is currently unable to process withdrawals. We strongly advise against depositing. All onboarding of new clients has been suspended until further notice.” Its predicament highlights just how volatile the digital assets business is as it goes through its initial emergence and evolution phase.

Binance said in a statement posted on Twitter that the issues facing FTX were “beyond our control or ability to help”. “Every time a major player in an industry fails, retail consumers will suffer. We have seen over the last several years that the crypto ecosystem is becoming more resilient, and we believe in time that outliers that misuse user funds will be weeded out by the free market,” it said pointedly.

The exchange added that “as regulatory frameworks are developed, and as the industry continues to evolve toward greater decentralisation, the ecosystem will grow stronger”. FTX was forced to turn to Binance for help after suffering “a significant liquidity crunch”.

Mr Bankman-Fried, in a letter sent to FTX staff on Tuesday that was obtained by Reuters, revealed that the crypto currency exchange suffered $6bn of withdrawals in the previous 72 hours.

He wrote: “On an average day, we have tens of millions of dollars of net in/outflows. Things were mostly average until this weekend; a few days ago. In the last 72 hours, we’ve had roughly $6bn of net withdrawals from FTX.” The FTX chief added that withdrawals from FTX.com were “effectively paused”.

FTX’s sharp, and sudden, descent into trouble was sparked by reports that Alameda Research, FTX’s sister company, held around half of its multi-billion dollar assets in the FTT crypto tokens previously created by FTX.

Binance’s CZ responded by revealing that Binance would be selling $2bn worth of FTT tokens that it held, and the move send the latter’s price crashing through the floor as investors stampeded for the exit despite the best efforts of Mr Bankman-Fried and FTX to halt the sell-off that became a rout.


Maximilianotto 1 year, 6 months ago

Just Ponzi. Allen Stanford 2.0 Welcome to The Bahamas . The IMF will resolve. Need some price control on Albany 🔥 sale condos ? Fortunately now our competent DPM selling Our Lucaya. Also needs price control.$1,00?


sheeprunner12 1 year, 6 months ago

Lord Jesus ........... the old saying "everything that glitters, ain't gold" is so true.

This is why hard currency notes are still the gold standard ...... and why Bahamians are reluctant to fool around with these new fancy forms of "currency".

The Mark of the Beast is real ................. just look at Sweden with their microchip in hand


TalRussell 1 year, 6 months ago

FTX’s **confirmed filling for bankruptcy will send chills up spines some the colony's local politicians, officials, along the network of the politically appointed and anointed.

No hiding dirty linens, once the bankruptcy trustee starts filing hundreds court documents which then fall within public access domain.

Lots no comment from current politicians.    Notice the certainty in the nothing but equal silence has overcome over the RedParty's **normally quick to comment on this, that and everything.

Yep, more so Thee Mr. Minnis and sidekick Pintard.

Just how dirty is the linen? Well, we're soon gain access to ― Yes


sheeprunner12 1 year, 6 months ago

Prime Minister Philip Davis KC previously said his administration was working with FTX to structure The Bahamas’ blue carbon credits, derived from its seagrass and mangrove carbon sinks, and exploring the creation of a carbon credit exchange with it where these securities could be traded. That work is now likely to be interrupted at the very least, and the Government may need to seek out a new partner.

This is not good for our country ......... Brave has a history of dealing with dubious underworld characters in his profession as a criminal lawyer (he bragged about his prowess).

Now, the chickens are coming home to roost in this "digital" underworld and Brave will be exposed in his dealings with so-called investors who will be found wanting by Uncle Sam.

This will give the OECD/FATF more ammunition to look at us with suspicion and justify their reasons for downgrading us.


TalRussell 1 year, 6 months ago

@Comrade SheepRunner, just how talkie will you remain once court documents begin to reveal the cross-party lines is the linen?
Well, we're soon to gain access as to the local scope of those named to then have to explain the who, what, why ― Yes?


Maximilianotto 1 year, 6 months ago

Don’t forget Sarkis vs China State… this will also become extremely toxic for some past PEPs,AGs etc. Also this s..t will hit the fan - they can emigrate to PRC but without transiting the US. Or join Allen Stanford and SBF in US Ritz Carlton?


Sickened 1 year, 6 months ago

Anyone buying B$ at the moment? 50 cents on the Yankee dollar. Anyone?


John 1 year, 6 months ago

The old saying that s still new ‘Only invest in risky investments what you can afford to lose.’


Maximilianotto 1 year, 6 months ago

Bernie Madoff - 150 years, damages $65 bn Allen Stanford - 110 years, damages $7 bn SBF -????? XXXX Years, damages $7-9 bn China State and Partners with Memory Loss?


Proguing 1 year, 6 months ago

Damage is a lot more than $7-9 Billion. You also have to take into account the money lost by investors:



ThisIsOurs 1 year, 6 months ago

"we believe in time that outliers that misuse user funds will be weeded out by the free market,”

That's an interesting statement from CZ


ThisIsOurs 1 year, 6 months ago

Crypto is just not real money. Sure someone gave it to you in exchange for your car, but where did it start? Did someone put money in a bank that was the equivalent of 2000 coins or did they simply open an excel spreadsheet and write I have 2000 coins worth 3 BILLION dollars! The person left holding the bag has air in their hands. The only people who make out are the ones smart enough to sell the bag before it burst.


bahamianson 1 year, 6 months ago

Always a nation for sale. It seems to not stop. You can bet that politicians close to this made investments. Politicians are the first to jump because they know what is coming down the pike. Next, their families benefit. Lastly, their second family, their sweetheart.


JokeyJack 1 year, 6 months ago

Why are we wasting OUR resources investigating this ?????????

Let the European Union investigate it. They always want to be all up in our business and be blacklisting us. Let them figure it out, or just forget about it.

When are we going to BAN ALL FLIGHTS from Europe to this country and require visitors visas at a cost of $500 each ? Why are we playing dead on this issue like a well trained dog?

Could it be that we actually ARE well trained dogs? I'm starting to think so.


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