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FTX’s $675k link to govt officials

Payouts included $500k ‘purported donation’, says US-appointed examiner

• ‘Purported donations’ revealed in DOJ-tied probe

• Ex-employee dismisses $1m ‘bonus’ bribe fears

• Exchange hired firm to seek out ‘lax’ regulation

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FTX and its jailed founder, Sam Bankman-Fried, paid $675,000 to “entities affiliated with high-ranking Bahamian government officials and their families”, it was revealed yesterday.

Robert Cleary, the examiner appointed by the US Justice Department trustee to investigate the crypto exchange’s collapse, revealed that one “purported donation” totalled $500,000 as the probe into the multi-billion dollar fraud inched a step closer to the Bahamian political and official elite.

His report, filed with the Delaware Bankruptcy Court, in a section entitled “payments to and contacts with Bahamian government officials”, drew on evidence assembled by Nardello & Co, a global investigations firm that specialises in bribery and corruption-related matters, plus Sullivan & Cromwell, the law firm working for FTX’s US chief, John Ray, to reach its conclusions.

“Sullivan & Cromwell and Nardello also found that the FTX group made several donations to entities affiliated with Bahamian government officials and their families,” Mr Cleary wrote. “For example, the FTX group sent $500,000 as a purported donation to an entity owned by relatives of a high-ranking Bahamian government official.

“In addition, the FTX group donated $175,000 to other entities affiliated with family members of high-ranking Bahamian government officials. Finally, Sullivan & Cromwell and Nardello’s investigation identified other contacts between the FTX group and Bahamian government officials.”

No names or identities were disclosed by the FTX examiner. However, there is no doubt that Mr Cleary, Mr Ray and their teams know who the “entities”, families and “officials” are as the report references that these details came from a Nardello report dated May 13, 2023, which is titled: ‘Issues concerning Bahamian insolvency proceedings involving FTX’.

Also mentioned as a source for the $675,000 payment information is a Sullivan & Cromwell report dated March 15, 2024, and described as a ‘Review of post-petition investigations for examiner’. The information in these documents and Mr Cleary’s report will also be available to the US Department of Justice.

The findings do not distinguish between Cabinet ministers/MPs and top civil servants in employing the term “official”. Nor do they say whether the “government officials” are affiliated with the FNM or PLP. While FTX’s collapse occurred under the Davis administration, the crypto exchange first arrived in The Bahamas - and was licensed - under its Minnis predecessor.

Tribune Business research, using prior Supreme Court reports by FTX Digital Markets’ liquidators, shows the crypto exchange’s Bahamian subsidiary was incorporated on July 22, 2021, and licensed and registered to operate in The Bahamas under the Digital Assets and Registered Exchanges (DARE) Act on September 10 that year.

That would have occurred under the Minnis administration just six days before the general election. Former prime minister, Dr Hubert Minnis, could not be reached for comment yesterday but previously told this newspaper he could not recall seeing or dealing with any of FTX’s permit applications during his time in office. “They never reached us,” he said. “They never came before any committee I chaired or sat on.”’

Tribune Business yesterday also reached out to Latrae Rahming, the Prime Minister’s communications director, for comment from the Government but no reply was received before press time last night. However, Mr Cleary, who was previously US attorney for New Jersey and southern Illinois, and acted as lead prosecutor in the

‘Unabomber’ case, said the probe did not stop with the “purported donations”.

“Sullivan & Cromwell, with assistance from Nardello, also investigated other connections between the FTX group and current or former Bahamian government officials, including payments made and other benefits conferred in an apparent effort to secure influence in The Bahamas,” he wrote.

Among the payments scrutinised was the $1m “bonus” paid to “a former Bahamian government official”, then acting as an attorney for FTX Digital Markets, the group’s Bahamian subsidiary, in return for expediting the necessary licences that would permit the crypto exchange to operate in this jurisdiction.

Allyson Maynard-Gibson KC, a former attorney general and ex-minister of financial services and investments, declined to comment last June when asked by Tribune Business whether she was the person involved. “Our firm does not comment on any client nor any matter connected with any client,” she said, referencing the law firm, Clement T. Maynard & Company.

Mr Cleary’s report revealed that Can Sun, the former FTX general counsel who offered the $1m “bonus”, was dismissive and almost scornful when asked if this payment represented a “bribe”. He wrote: “Sullivan & Cromwell determined that this ‘bonus’ was offered to the former government official to secure her assistance in obtaining a necessary license for FTX Digital Markets under the Bahamas’ Digital Assets and Registered Exchanges Act.

“In its investigation, Sullivan & Cromwell developed evidence that, when asked whether these payments could possibly constitute bribes, the FTX group employee who offered the ‘bonus’ dismissed those concerns based on his view that the recipient of those payments was no longer a government official. The former Bahamian government official secured the licence for FTX Digital Markets within six weeks.”

Mr Cleary’s report also singled out Valdez Russell, the former vice-president of communications and corporate social responsibility for FTX Digital Markets, who declined to comment on assertions he may face “potential claims” after purportedly receiving “twice the fees” set out in his employment agreement.

Mr Russell was not named, instead being referred to as “consultant one”, but the job description mentioned by Mr Cleary matches the one he had with FTX. Mr Russell, who has his own firm, VKR Insights, was said not to have replied to requests submitted under US bankruptcy laws by Quinn Emmanuel, a law firm, but it is understood these were passed on to his Bahamian attorneys.

“After the FTX coup moved its operations to The Bahamas, it retained consultant one in May 2021 to facilitate its move,” Mr Cleary wrote. “Consultant one was engaged specifically due to his connections with the Bahamian government.

“In September 2021, he was hired by FTX Digital Markets as its vice-president of communications and corporate social responsibility. Consultant one was successful in facilitating relationships between the FTX leadership and the Bahamian government, and assisted with several property acquisitions in The Bahamas.

“As a consultant, consultant one received twice the fees contemplated in his retention agreement. Though Quinn Emanuel has identified potential claims against Consultant one, such claims would be brought by the Bahamian liquidators pursuant to the settlement agreement with FTX Digital Markets.”

Foreign investors, uncertain about how to operate in The Bahamas, typically reach out to local law firms and Bahamians they feel they can trust to advise them on how to establish business and obtain the necessary approvals. The “potential claims” against Mr Russell were not identified, but appear to imply that some of the fee payments could be subject to claw back.

Meanwhile, also receiving a bonus over FTX’s Bahamas move was XReg Consulting. When the crypto exchange decided to relocate from Hong Kong in 2020, XReg was tasked with coming up with options for a new home, and one of the search criteria was to find jurisdictions that “offered lax regulation of crypto currency”.

“XReg additionally assisted on the acquisition of required business licences in Gibraltar, Cyprus, the UK, Singapore and The Bahamas, among other countries. XReg also drafted FTX Trading’s anti-money laundering policies,” Mr Cleary wrote.

“In total, it received approximately $4m for its services, including a $2.75m bonus upon the completion of FTX Trading’s business licence applications in Singapore and The Bahamas.” The Securities Commission has always argued that the DARE Act placed The Bahamas among the most well-regulated digital assets jurisdictions and enabled this nation to respond quickest when FTX collapsed.

Mr Cleary said Sullivan & Cromwell also probed the $50m loan to Bahamas- based Deltec Bank & Trust that was facilitated by Ryan Salame, the former head of FTX Digital Markets who faced an up to seven-year prison term at his sentencing next week. The loan, he wrote, was provided to ease Deltec’s “capital issues”.

“Sullivan & Cromwell investigated the circumstances surrounding two $50m loans involving Salame, Alameda and two other companies, Deltec International Group and Norton Hall Ltd,” the FTX examiner wrote.

“The investigation concluded that the loans were intended to ameliorate Deltec’s capital issues while ensuring that Deltec would ‘owe’ the FTX Group as a result, and the related promissory notes were structured to conceal Alameda’s role in the loans.

“The investigation further determined that Salame executed one note as a ‘director’ of Norton Hall despite not being a director of Norton Hall, and despite Norton Hall’s director being unaware of the note. Following the investigation the debtors reached a settlement regarding the loans, with Deltec agreeing to pay the value of the loan with interest and the remaining obligation extinguished.”

Mr Cleary also wrote that an investigation by the Quinn Emanuel’s law firm found that Deltec Ban “did not conduct any such inquiries” into the “unusual transactions” between FTX and Alameda Research, the latter being Mr Bankman Fried’s private trading arm.

The FTX examiner also touched on the return on $100m in assets to 1,500 purported “Bahamian clients in violation of the freeze imposed on FTX business by both the Bahamian Supreme Court and Chapter 11 bankruptcy proceedings in the US.

“Sullivan & Cromwell has also investigated certain non-fungible token (NFT transactions that occurred immediately before and on the petition date.,” M Cleary wrote.

“By analyzing withdrawal and trading data from that period, Sullivan & Cromwell found that those NFT transactions were part of a scheme whereby FTX com users, who could not withdraw funds from the exchange after FTX.com froze withdrawals, paid inflated prices for NFTs sold by Bahamian individuals.

“Those Bahamian individuals, who could withdraw funds from the exchange after FTX.com lifted the withdrawal freeze for Bahamian users on November 10, 2022, would in turn withdraw the proceeds from the sales of NFTs from FTX.com.....The debtors continue to assess next steps with respect to the individuals involved in these transactions.”

CORRECTION: The print version of this story had an incorrect headline stating the total sum was $765k. The amount is $675k. We apologise for the error.

Comments

mandela 3 weeks, 5 days ago

If you can't name us persons involved with this corruption and the persons are not held accountable and responsible, then why make the accusations. The Bahamian people have the right to know who the corruptors are.

realitycheck242 3 weeks, 5 days ago

We all know who the "All for me Baby crew are"

DWW 3 weeks, 2 days ago

care to elaborate?

Porcupine 3 weeks, 5 days ago

This would be funny, if not so sad.

ExposedU2C 3 weeks, 5 days ago

Why has Robert Cleary, the examiner appointed by the US Justice Department, not yet commenced appropriate legal proceedings at the US Federal government level against the Bahamians named in both the Nardello & Co and Sullivan & Cromwell reports. These crooked Bahamians played an instrumental role in paving the way for the many crimes associated with the FTX/Alameda debacle, including illegal payments that violated US Federal election campaign laws?

Is the US government really going to participate in the cover-up of crimes committed by Bahamian government officials as well as well-connected members of the political ruling political class in our country? If the US government were truly an ally of our nation and a friend of the Bahamian people, it would do the right thing through the US Justice Department and the Delaware Bankruptcy proceeding to ensure all who have committed serious crimes are held responsible and accountable whether they be US or Bahamian citizens.

As Bahamians we must ask ourselves why is the US Federal government so vested in protecting the greedy and despicable likes of Allyson Maynard-Gibson, a/k/a the Wicked Witch of the West, and Maxine Waters? Why did VP Kamala Harris travel to The Bahamas to cut various quid pro quo deals for the purpose of keeping the lid on FTX/Alameda crimes committed by both corrupt Bahamian and US politicians. Why is it the liquidators in The Bahamas refused to pursue legal claims against those Bahamians known to have been greatly enriched with funds stolen from customers of FTX/Alameda under circumstances that likely constitute fraudulent preferences.

And what about the Deltec Bank's claim that it did not receive and use funds stolen from customers of FTX/Alameda to purchase Ansbacher (Bahamas) Limited. The $50 million loan Deltec received from the FTX/Alameda group was among several deals SBF struck with Jean Chalopin, the head of Deltec and Moonstone banks — and co-creator of Inspector Gadget — who forged a lucrative relationship with FTX. Was a good portion of the $50 million loan used by Deltec to plug the hole in its capital created by the purchase of Ansbacher?

The US government cannot continue to hold the Bahamian people responsible for the many corrupt actions of criminals running amok within our political ruling class if it continues to protect these same crooks by concealing their names and covering up their crimes. All Bahamians have a right to this information and, frankly, the Bahamian people deserve to be more fairly treated then the Bahamian criminals the US government is apparently willing to protect. And let's remember that the headline amount of $675k is but the very tip of the iceberg.

Porcupine 3 weeks, 5 days ago

You are asking too many of the right questions. Be careful. The US government is a criminal organization. Didn't you answer a few of your own questions in your comment? It is the tip of the iceberg, and yes yes it goes to the very top of both countries. We have to remember that the political class is only there to work for and shield their rich owners. This is the joke played on us.

SP 3 weeks, 4 days ago

The US government is officially ranked as being more corrupt than the Bahamas government!

If they dare open this can of skeletons, they also risk any number of skeletons coming out of the closet.

Sickened 3 weeks, 5 days ago

Shouldn't the Government of The Bahamas request the details of the investigation so that they can pursue and prosecute any Bahamians who may have broken the law? Or are they a little worried??? When the FNM win the next election will they request this information? Or are they a little scared as well?? 50 years of independence and corrupt has destroyed our paradise.

ExposedU2C 3 weeks, 5 days ago

You raise an interesting point.

Pintard and the FNM leadership should be going on record as promising the Bahamian people that, if they become the next government, they will immediately do everything within their power to obtain from the US Justice Dept., and the Delaware bankruptcy court, full details of the likely crimes committed by Bahamian government officials and other members of the political ruling class so that the matters can be further investigated and criminal charges brought where warranted under our own laws.

The Bahamian news media should pursue obtaining such a forthright promise and undertaking from Pintard and the FNM leadership at the earliest possible time.

bahamianson 3 weeks, 3 days ago

If any party commits to that, I will vote for them, plp or fnm. I will vote just to see justice. Politicians are corrupt!!

sheeprunner12 3 weeks, 5 days ago

Minnis may seek to prosecute these PLPs who have blatantly sucked off the FTX teat ....... But do not expect Pintard to do anything about it.

Pintard is either on the New Day payroll .......... or deep up in Brave's ass

ThisIsOurs 3 weeks, 5 days ago

You're projecting. Because the speculation is the PLP is funding Minnis to cause disruption in the FNM

TalRussell 3 weeks, 5 days ago

Just carry out a laser focus of FTX and subsidiaries and local agents.-- Subscribe to Stop N Shop:--"Simple Guide 4 Deleted Files and Emails in 3 Minutes & 3 Steps Recovery". Price: One Shilling.---Yes?

ThisIsOurs 3 weeks, 4 days ago

"XReg was tasked with coming up with options for a new home, and one of the search criteria was to find jurisdictions that “offered lax regulation of crypto currency”.

That's interesting and laughable. It literally belies everything the PM said. They were shopping around for a country with lax crypto laws and they found the Bahamas to set up their playground. How stupid does that make us look talking about the ironclad DARE act being in place.

"Sullivan & Cromwell found that those NFT transactions were part of a scheme whereby FTX com users, who could not withdraw funds from the exchange after FTX.com froze withdrawals, paid inflated prices for NFTs sold by Bahamian individuals."

Wow. Seems like outright fraud. Artificially Inflating prices of assets to withdraw money which should have been frozen. And if I remember correctly the relaxation was called for by the PM who must have known that when an organization is in financial trouble noone can arbitrarily decide on a group of creditors to get paid out first. Theres an orderly process. He knows this.

ExposedU2C 3 weeks, 4 days ago

Spot on!

John Ray and the liquidators based in The Bahamas have all along had the means to determine exactly who were the Bahamian beneficiaries of the fraudulent NFT transactions for the purpose of pursuing legitimate claims against them for unjust enrichment at great cost to the creditors of the estate of the FTX group.

SP 3 weeks, 4 days ago

The usual well known friends, family, and lovers cartel are once again caught facilitating government corruption!

This is a never ending carrousel of corruption that has kept our country enslaved post independence.

Bahamians are undoubtably THE biggest fools in the hemisphere!

ExposedU2C 3 weeks, 4 days ago

I am slowly beginning to understand why so many Bahamians believe that the corrupt cabal which exists in the US congress and US intelligence agencies may be of a much greater existential threat to The Bahamas than the ChiComs who have set up shop in our nation and now have control over our puppet government.

Genuine friends of our nation would not allow or assist in the cover up of criminal acts perpetrated by Bahamian government officials and other well connected members of our political ruling class. Protecting such persons only serves to leave the Bahamian people vulnerable to the severe social and economic effects of future criminal activities that will undoubtedly be committed by these very same persons.

The Bahamian people really deserve better from the US government and the US people.

LastManStanding 3 weeks, 3 days ago

I don't see where you keep coming from with the angle that the Chinese own our government, I saw you mention something similar on the article regarding the Palestinian recognition. I don't see anything to suggest that the Chinese strong armed the government into recognizing Palestine, but we have documented proof that we were forced to sanction Russia by the US "government" lest we (implicitly) end up sanctioned ourselves (a conflict that has nothing to do with our day to day lives and in which the moral lines are a lot greyer than the Palestine issue). The Chinese have a presence here but anyone who lives here can see that the American influence is far greater, which was even admitted to by the Chinese embassy a while back. As it relates to FTX, some American politicians took huge payouts just like some Bahamian ones did. They are all in on it together, and many of the worst here have ties with the worst over there. It's all a big club.

ExposedU2C 3 weeks, 3 days ago

Open your eyes wider my friend. There are signs everywhere that our government is now unduly influenced by the ChiComs, contrary to the longer term interests of the Bahamian people.

Look at the large number of major construction projects that have been financed by the ChiComs, mainly employing Chinese workers from their own mainland.

Look at the related debt trap successfully created by the ChiComs over the last two or so decades as a result of the enormous increase in our small nation's external debt associated with the ChiCom sponsored projects, which many would argue are unsuitable for our environment and true national needs.

Ask yourself why the agreements signed by our successive corrupt governments with the ChiComs contain highly secretive terms regarding the collateral put up to secure the external loans in the event of default or the need for a restructuring of the debt.

Consider why an increasing number of men at the highest levels of our elitist political ruling class now often choose to wear the modern day version of the traditional Mao suit, e.g. corrupt Vomit Christie, the very greedy Snake Wilson, and so on.

Look at the ideological indoctrination being spewed at our younger people by ChiCom institutions like the hideous propagandist Confucius Institute that surreptitiously preaches values contrary to the traditional values of Bahamians.

The ChiComs, like the world's largest corporations run by the greedy billionaire oligarchs who now control the U.S. government, never act altruistically when they set up shop in another nation. Their foreign policy goal is to rape, pillage and plunder whatever resources exist in other nations to further their own interests without regard to the interests of other nations. Ask yourself why the CCP have done little to help out Haiti. Also ask yourself why the ChiComs are not yet willing to consider funding major infrastructural projects in The Bahamas related to our energy and potable water needs.

But the great distinction that exists in the case of the ChiComs is their stated hell-bent goal and mission, borne out of 5,000 plus years of a culturally ingrained sense of entitlement, to establish an authoritarian global order over which the hierarchy of the CCP will rule supreme forever more.

That simple fact is beginning to scare the dickens out of the U.S. people and should do likewise for the Bahamian people before it's much too late.

TalRussell 3 weeks, 4 days ago

How is it possible that those that were easily bought and paid for and owned, see little chance of running across those with sufficient integrity who are willing to expose their criminal love for SBB. -- Hope they'll be proven wrong.---Yes?

sheeprunner12 3 weeks, 3 days ago

Exposed2C ....... The Chinese are slowly buying up the Western Hemisphere just as the Arabs are buying up Africa.

The West prides itself on capitalism ....... The East is beating the West at its own capitalist game.

So be it ..........

ExposedU2C 3 weeks, 2 days ago

The problem is, while the US has made significant strides in stamping out the most blatant forms of racism, the ChiComs will never so. They are infinitely more adept and ruthless in seizing strangle-hold control of other nations (especially black nations), to achieve their domination objectives, than the US government could or would ever be with the help of its greedy corporate friends and the super billionaire class.

None of us should ever forget that the CCP has zero respect for property and human rights of any kind that they perceive would conflict with their goals and objectives. The meteoric rise of Communist China is directly attributable to western nations and their corporations foolishly not cracking down on the theft of billions and billions of dollars of intellectual property over the last four decades in exchange for access to cheap labour.

That has now come back to bite the western nations, especially the US, in the proverbial butt. And while western nations have come a long way in fighting all forms of racism, I can assure you that generations of Bahamians will come and go and none of them will ever see a black man, or even a woman of colour, be elected leader of the CCP.

We must be careful to avoid thinking the foreign policy initiatives of the ChiComs can't possibly be any worse than those of the US government. As much as we like seeing the US get a taste of its own medicine in the way it has gravely mistreated so many other nations over many decades, including the Bahamas, we must accept that the ChiComs are exponentially much more devious and evil in all their endeavours aimed at dominating the world.

SP 3 weeks, 2 days ago

Ignorance is bliss! US controlled media propaganda has very successfully done a yeoman's job of demonizing China.

Africa is the most prominent example of US manipulation and exploitation which unquestionably explains the reason Africa is expediently ridding itself of the US and its allies that have held Africa in bondage for far to long!

ExposedU2C 3 weeks, 2 days ago

The ChiComs have enslaved millions of Africans by the devious and hideous use of their now well honed debt trap aimed at seizing control of nations with mineral resources or other strategic assets such as sea ports at key choke points for shipping traffic. They are now employing the same debt trap tactics right under the belly of US in the western hemisphere. Ignorance is only bliss for those who do not understand, or decide to ignore, the harsh reality of what is occurring with the help of duped and/or bribed political leaders all over the world.

And "Yes", the US government and its greedy corporate partners have a long history of exploiting other nations whenever they can to get whatever they want. But the sinister and evil ChiComs are driven by an overriding goal that makes their seizure and control of other nations many orders of magnitude worse than the US government and its corporate partners could ever be.

TalRussell 3 weeks, 2 days ago

Chinese-Bahamians, ain't nothin' new,--Having a history, dating back to at least the late 1800's,---Can't be so bad, when, thousands of Bahamians, has Chinese Communism DNA.--like the Rodriguez and Gonzalez families.--Yes?

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