Bahamas defends itself in the wake of FTX scandal

Attorney General criticises new FTX CEO’s ‘misrepresentations’ and ‘inaccurate allegations’

Bahamas                                 
Sam Bankman-Fried, FTX’s founder and former CEO, oversaw the FTX empire from a luxury Bahamian mansion – Photo: Shutterstock
                                

The Attorney General of the Bahamas, Ryan Pinder, has defended his nation’s approach to cryptoasset regulation in the wake of the FTX scandal.

FTX began November as one of the world’s largest cryptocurrency exchanges. However, after its collapse following the revelation of apparent substantial fraud and corporate failure, the Bahamas-registered company will end the month in disgrace. 

Particular focus and scorn has been directed at Sam Bankman-Fried, FTX’s founder and former CEO. The 30-year old oversaw the FTX empire from a luxury Bahamian mansion. 

Pinder defends Bahamian crypto framework

In an online address, Pinder said that the Bahamas had acted “swiftly” by suspending FTX Digital Markets’ licence, and securing its assets “to be held on behalf of and for the benefit and restitution of clients and creditors” and by appointing provisional regulators. 

Pinder said: “We have been shocked at the ignorance of those who assert that FTX came to the Bahamas because they did not want to submit to regulatory scrutiny. In fact, the world is full of countries in which there is no legislative or regulatory authority over the crypto and digital asset business, but the Bahamas is not one of these countries."

The attorney-general stressed that the nation’s Securities Commission was “the first regulator in the world to take significant steps with respect to the FTX group of companies” and was able to act quickly because of the country’s legislative framework. 

Pinder also took aim at John Jay Ray III, Bankman-Fried’s replacement as CEO of FTX, who is overseeing the group’s bankruptcy process. Ray, a veteran bankruptcy expert, had described FTX’s situation as “unprecedented” and accused the Bahamian government of ordering “unauthorised” transactions.  

In response, the Attorney General said that Ray “misrepresented” the government’s actions and “used inaccurate allegations” in its recent court filings. He said: ”We urge all authorities here and abroad at a minimum to exercise at least the same amount of prudence and restraint in their public commentary as we do so as not to prejudice any of the proceedings that are ongoing.”

Some critics have argued that Pinder should recuse himself given his possible ties to FTX. He quit public service in 2014 to serve as chief legal officer at the Bahamas-based Deltec Bank & Trust. 

According to the New York Times, Deltec’s chair, Jean Chalopin, is also the chair of the FTX-owned Farmington State Bank in Washington State.

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