CRYPTO FIRM PROBE

Bahamian securities authorities and local police have begun an investigation to determine whether any criminal acts were committed when a locally headquartered global cryptocurrency company collapsed spectacularly last week. Local officials also say they are moving quickly to ensure The Bahamas’ growing reputation as global digital hub is protected with the demise of FTX in recent days.

Incorporated in Antigua but operating out of The Bahamas, FTX’s collapse has left hundreds of thousands of investors including celebrities like NFL legend Tom Brady in the lurch. The company filed for bankruptcy last Friday, forcing Bahamian authorities to freeze assets and seize control of the firm while appointing top attorney Brian Simms as the liquidator to take control of it and any related assets it might have held in The Bahamas.

FTX’s collapse has also now shone new light on another cryptocurrency trading platform with established links to The Bahamas-OKX which has already received a blanket ban from Chinese regulators for unprofessional conduct. OKX had previously operated as OKE and is currently based in the Seychelles with major offices in The Bahamas.

Bahamian regulators say that part of their focus would be on the $74 million in real estate assets FTX has acquired for this year alone. At center of issue as well for the securities commission are reports that FTX had misappropriated and had mishandled client assets and or had transferred assets to Alameda Research, one of its so-called sister companies in the US so regulators want to know if any laws were breached.

FILE – A sign for the FTX Arena, where the Miami Heat basketball team plays, is illuminated on Nov. 12, 2022, in Miami. FTX filed for bankruptcy protection Friday, Nov. 11. Associated Press/Marta Lavandier/ File

“In light of the collapse of FTX globally and the provisional liquidation of FTX Digital Markets Ltd., a team of financial investigators from the financial crimes investigation branch are working closely with the Bahamas securities commission to investigate if any criminal misconduct occurred,” police said in a statement.

Disgraced company boss Sam Bankman-Fried is reported to be cooperating with local investigators even as the administration of Prime Minister Phillip Davis is under pressure to explain whether any local money had been invested in FTX.  Police also say they are waiting to question him. He reportedly met with security commissioners on Saturday. He has denied international media reports that he has fled The Bahamas.

Davis, one of the Caribbean leaders who have been campaigning for polluting nations to pay for their negative role in climate change, had said he was exploring the idea of setting up a carbon credit exchange in The Bahamas with the help of FTX. It is unclear whether any of his plans had been implemented but the opposition Free National Movement (FNM) now wants explanations according to Leader Mike Pintard.

“We are all shocked by the daily revelations that are now becoming known nationally and internationally and call upon the government to provide the investing public a clear and cogent statement on the matter and the steps being taken to guard against the jurisdictional fall out and to shore up investor confidence,” he said. “Given current events, what impact will this development have on the potential for carbon trading, what alternative arrangements are being made and when will we see the first trade and benefit from this activity, if any?” he told the Tribune newspaper.

In April, PM Davis opened FTX’s offices in the country, while appealing to companies of similar digital ilk to set up shop there.

“We hope more companies within the cryptocurrency and blockchain markets will see The Bahamas as an ideal destination for their operations. I believe that the relocation of the world’s third-largest cryptocurrency exchange to our shores sends a clear signal to the rest of the fintech world that The Bahamas is open for business. Companies like FTX want to be in a well-regulated, stable environment like ours where continued growth and expansion are supported. Bahamian professionals will surely benefit from the jobs that will be created as a result.”

Company boss Bankman-Fried replied by saying that “The Bahamas is the right place to be. This has been way above any of our expectations and that has just been a huge, huge testament to everyone who has pitched in,” he said in better times.