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‘Absolutely untrue’ DARE influenced by FTX, Deltec

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

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CHRISTINA ROLLE

THE Securities Commission’s top executive yesterday slammed as “absolutely untrue” assertions that The Bahamas’ key digital assets law was influenced to benefit FTX and a local international bank.

Christina Rolle, its executive director, told Tribune Business the regulator had “not even heard of FTX” when the original Digital Assets and Registered Exchanges (DARE) Act was being written prior to its ultimate passage into law in 2020 when the Minnis administration was in office.

She hit back after late Friday legal filings in the south Florida federal court, part of an investor class action lawsuit against those allegedly responsible for their losses as a result of FTX’s late 2022 collapse, alleged that the crypto exchange worked with Bahamas-based Deltec Bank & Trust to “foster a lax regulatory environment” in this nation that had “no teeth”.

The new claims, based on nearly 7,000 pages of Telegram messages provided by Caroline Ellison, former girlfriend and crony of FTX founder, Sam Bankman-Fried, who has herself admitted wrongdoing and gave evidence against her former lover as part of a plea deal with US federal prosecutors, alleged that Deltec and its chairman, Jean Chalopin, played a key role in crafting the DARE Act.

“Deltec and Chalopin helped to foster a lax regulatory jurisdiction in The Bahamas necessary to the FTX fraud, and provided high-risk, non-routine banking services to FTX that other banks would not provide,” Friday’s legal filings alleged.

“As the chief executive of Deltec, Chalopin spent years assisting the Bahamian government in ‘transform[ing] the country into a sandbox for digital asset start-ups’. Indeed, as Chalopin tells it: ‘It would be nothing in The Bahamas if it weren’t for us [Deltec] in the beginning’.

“Transforming The Bahamas into a crypto haven was no easy task. Chalopin recalls it was like clearing a jungle in which ‘you have to use your machete and cut the branches’.... Eager to expand Deltec Bank’s crypto clientele even further, Mr Chalopin and his team of executives at Deltec Bank assisted the Bahamian government in drafting crypto-friendly DARE Act to attract digital asset start-ups and other crypto ventures to The Bahamas,” the revised class action lawsuit further claimed.

“With the help of Deltec Bank, that legislation passed in 2020. The DARE Act provides few, if any, safeguards to protect consumers and places no obligation on crypto exchanges to back clients’ funds with reserves...... Deltec Bank helped FTX achieve that veneer of regulatory compliance by helping to pass the DARE Act, which Deltec Bank worked to severely weaken and which, in truth, had no teeth.”

Branding FTX’s compliance with the DARE Act as “a fig leaf”, the lawsuit also seemingly drew on Telegram messages from Ryan Salame, head of FTX Digital Markets, the crypto exchange’s Bahamian subsidiary, who gave the impression that it had a significant role in developing the legislation.

“So important was pas- sage of the DARE Act to FTX that, according to Ryan Salame, it hired an ‘incredible’ outside lobbyist to ‘help on the DARE Act’ in The Bahamas, who ‘assisted a lot with modifications to the Act’ and who did ‘more pro bono work’ for FTX Group thereafter,” the class action lawsuit’s Friday filings alleged, without identifying the so-called “lobbyist”.

“Deltec Bank assisted FTX Group’s lobbying efforts, too, as Mr Chalopin has boasted that, with the help of Deltec Bank, the Bahamas ‘were one of the first regulators to put together something, and that attracted FTX’.” Mr Salame, like Ms Ellison, has also pled guilty to various US federal charges stemming from FTX’s collapse, while Mr Chalopin and Deltec continue to deny the claims against them.

Ms Rolle, though, vehemently denied to Tribune Business that either FTX or Deltec/Mr Chalopin had any role in, or influence over, the DARE Act’s crafting or passage. While a Deltec executive “participated in our normal consultation meetings” with industry stakeholders, she recalled nothing from the Lyford Cay-based institution that would have affected the law’s intent or composition.

“That is absolutely untrue,” she told this newspaper of the lawsuit’s DARE Act claims. “That is not correct. When the DARE Act was written we had not heard of FTX and if FTX and Deltec participated in any consultation with comments on the DARE Act they would have done that in the normal way.

“When the Act was being developed, I don’t think FTX and Deltec commented in any way. I know we had not heard of FTX when DARE was being developed. We have this normal consultation process, and I recall one executive from Deltec participated in our normal consultation meetings along with other industry participants.

“I don’t recall that they had any significant or unique comments; certainly nothing that brought changes to the direction of the legislation... We had a consultation process and our consultation process was followed. Certainly, with the original version of DARE, we had not even heard of FTX.” The DARE Act is presently undergo- ing revisions that will be brought to Parliament for passage into law.

The former FTX investors behind the class action, in their Friday filings voiced their frustration at Deltec and Mr Chalopin’s opposition to producing documents as part of the discovery process with both arguing that they cannot cooperate without “an order from a Bahamian court permitting” this. Then came the co-operation from Ms Ellison, plus fellow former SBF cronies, Gary Wang and Nishad Singh.

“Ms Ellison’s proffer session was especially fruitful for plaintiffs’ amendment as to Deltec and Chalopin,” they said. “Following that session, Ms Ellison produced nearly 7,000 pages of Telegram messages between Deltec and Alameda or FTX employees regarding account reconciliations and Alameda; transfers of FTX customer funds to Alameda’s accounts; FTX’s purchases of the Tether stable coin; and Deltec’s off-the-books multi-billion-dollar line of credit that it extend to Alameda; which bear directly on Deltec’s contacts with the relevant forums and knowledge and assistance of the FTX fraud.”

Comments

ThisIsOurs 5 months ago

"new claims, based on nearly 7,000 pages of Telegram messages provided by Caroline Ellison, former girlfriend and crony of FTX founder, Sam Bankman-Fried, who has herself admitted wrongdoing and gave evidence against her former lover as part of a plea deal with US federal prosecutors, alleged that Deltec and its chairman, Jean Chalopin, played a key role in crafting the DARE Act."

"the lawsuit also seemingly drew on Telegram messages from Ryan Salame, head of FTX Digital Markets, the crypto exchange’s Bahamian subsidiary,"

Well.. contemporaneous accounts hold great weight in court proceedings

ExposedU2C 5 months ago

KABOOM!!!

Note how Christina Rolle takes great care to avoid mentioning the changes to the original Digital Assets and Registered Exchanges (DARE) Act that were enacted in May 2022. SBF was arrested in The Bahamas later that same year, in December 2022.

And the whole world saw Dumbo Davis bragging and touting all over the place about how his government was doing everything possible to make The Bahamas the most conducive and friendly place on the planet for crypto entrepreneurs to set up shop and operate their businesses.

Proguing 5 months ago

Here are some questions that need to be answered. As this newspaper commented FTX paid $ one million to get its license approved in record time. How is this possible? Why was the executive director of the Securities Commission and other officials present at events organized by FTX, such as their ground breaking for their new headquarters and their crypto conference? Is this the role of a regulator?

killemwitdakno 5 months ago

Suiing the place that actually created regulations because the place with the US customers (The US) had none. Got it. Sue your own SEC for that. That's where your elite capture was.

What was "teeth" supposed to be graded against with us being a leader on crypto regulation? How was this modeled for FTX if the other countries that swiftly copied it after the case to prevent such issues were ones that didn't approve FTX in the first place? Did FTX not arrive after reviewing it?

When she knew it was co-mingling before it got to a high-risk level, she could've called merely called her dad.

ThisIsOurs 5 months ago

"What was "teeth" supposed to be graded against with us being a leader on crypto regulation"

You've swallowed the koolaid.

One of the first things that was clear when FTX imploded was they had zero oversight.

At minimum anybody monitoring their operation should have noticed the millions flowing out the country, at minimum. At minimum someone should have noticed there was zero governance infrastructure. At minimum someone should have known the open secret that Bahamians were sending in money to trade crypto, an activity that wasnt licensed. At minimum someone should have then noticed that client deposits werent segregated, were dwindling and grouped with the money flowing out. At minimum someone should have noticed that barring the unlicensed activity, Sam was calculating margins on billions on his fingers and toes. These are just some of the surface level oversights that are mindboggling when someone is claiming to have exercised exemplarary regulatory control where nothing else could have been done to stop this

ThisIsOurs 5 months ago

Be reminded that the damning evidence in the illegal dumping conviction of the cruise line in Florida were the internal emails, ~"just alter the logs on waste disposal", same for the Bahamar case, ~"you have to fake it(construction work) better"

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