NASSAU, Bahamas – The Bahamas government has dismissed as “inaccurate allegations” international criticism of the country’s digital asset regulations following the collapse of FTX.
Attorney General Ryan Pinder addressing the nation on the FTX collapseThe Bahamas headquartered FTX, which was reported to be a significant player in the crypto space, is under investigation by the Securities Commission of The Bahamas (SCB) following its speculator collapse.
FTX, which is registered here as FTX Digital Markets Ltd, moved its headquarters from Hong Kong to The Bahamas last year and the police in Nassau have already announced an investigation into FTX that had been backed by elite investors like BlackRock and Sequoia Capital, rapidly becoming one of the biggest crypto exchanges in the world.
In addition to the SCB probe, the US Justice Department is also investigating FTX.
FTX Trading Ltd’s new chief executive, John Ray, in US court filings on November 17, said he had “credible evidence” that the Bahamas government “directed unauthorized access” to FTX’s systems, and aided the withdrawal of digital assets.
But Attorney General, Ryan Pinder responding to Ray’s remarks described them as “regrettable” and defended the Securities Commission’s decision to protect FTX Digital Markets’ assets for the benefit of clients and creditors.
“It is extremely regrettable that in Chapter 11 filings for bankruptcy protection made in New York last week, that the new chief executive of FTX Trading Ltd – not the Bahamas-based FTX Digital Markets – but an affiliate company incorporated in Antigua and Barbuda—misrepresented the timely action taken by the Securities Commission, and used inaccurate allegations lodged in the transfer motion to do so,” Pinder said.
“It is possible that the prospect of multi-million dollar legal and consultant fees is driving both their legal strategy and the intemperate statements. In any case, we urge prudence and accuracy in all future filings,” Pinder said in a television broadcast.
FTX Digital Markets had been paced into provisional liquidation earlier this month after experiencing a liquidity crisis, sparked by clients’ simultaneous withdrawal of assets from FTX. Following its liquidation, FTX, its sister company Alameda Research and dozens of other affiliates filed for a bankruptcy petition in Delaware and FTX founder Sam Bankman-Fried resigned as chief executive officer.
Ray has since replaced Bankman-Fried.
Pinder told Bahamians that as is provided for under the country’s regulatory framework, “we are already working with a number of specialists and experts, and will continue to do so as the need arises”.
He said there are a number of protective measures which the regulator has taken under the authority conferred by the Supreme Court of The Bahamas.
For the time being, we will not set out those measures in any further detail, until we are confident that doing so will not jeopardize any aspect of the ongoing investigations,” Pinder said, adding that as the investigations continue, he is advising the authorities to exercise “prudence and restraint” while commenting on matters related to FTX.
Pinder warned that “ill-informed speculation” will not be helpful to anyone involved, critical also of those persons who have been criticizing the government for being “silent” on matters regarding FTX’s implosion.
He said that due to ongoing investigations, officials must be careful in how they respond to questions related to the embattled crypto currency exchange.
“The dozens and dozens of companies involved, registered in numerous jurisdictions across the world, the scope of related parties, including some of the world’s most sophisticated investors, demonstrate the cross-border, multi-jurisdictional nature of this event.
“And it is deeply misguided to conclude that reluctance to communicate the details of an active investigation means that nothing is happening; in fact, the government’s discretion stems from how seriously we take our commitment to the rule of law and the independence of the securities regulator.
“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 crypto, but The Bahamas is not one of them”.
Pinder said that the authorities here have been able to assert their leadership in this new field because in the digital assets arena,” what matters is not the size of your land mass, or the size of your GDP, but the ingenuity and rigor of your people and jurisdiction.
“When a respected risk and market integrity firm ranked the world’s digital assets regulatory regimes earlier this year, our country was first, and for good reason. The digital asset sector is a high profile, embryonic sector of the Bahamian financial services sector, an area where The Bahamas has demonstrated global leadership for decades. As a world-leading destination for tourism, we have been audacious before in asserting that ‘it’s better in The Bahamas.’”
Pinder said, just like Prime Minister Phillip Davis, he has very confidence The Bahamas will emerge from the FTX’s fall out “in even higher esteem.”
Meanwhile, two United States legislators – Elizabeth Warren and Sheldon Whitehouse – are calling on the US Department of Justice (DOJ) to hold the executives of FTX accountable “to the fullest extent of the law” following the company’s collapse.
“We write to express deep concern over the disturbing allegations of fraud and illicit behavior that led to the collapse of cryptocurrency firm FTX Trading Ltd. (FTX) and to urge to the Department of Justice (DOJ or ‘the department’) to hold the company’s executives accountable to the fullest extent of the law,” the Senators wrote in a letter to Merrick Garland, the US attorney general, and Kenneth Polite Jr., the assistant attorney general for the criminal division.
“We were glad to see you both announce the DOJ’s renewed commitment to investigating and prosecuting white-collar crime earlier this year. In speeches at the American Bar Association’s White Collar Crime National Institute, you affirmed the department’s intent to ‘[hold] individuals accountable for white-collar crime, as opposed to only levying fines on companies’ and ‘to increase its focus on the flesh-and-blood victims of white-collar wrongdoing,” they added.
