The people move to the left and the government moves to the right: How to save yourself if you mistakenly believe in FTX’s crypto paradise?
Original title: Sam Bankman-Fried Built a Crypto Paradise in the Bahamas—Now He's a Bad Memory》
Original author: JOEL KHALILI, WIRED
Original text compiled by: Yanan, BitpushNews
Sam Bankman-Fried has created a crypto paradise in the Bahamas. But the highlight faded, leaving only unbearable memories. The Bahamas is working hard to restore its national reputation after the FTX thunderstorm.
Every Sunday morning, church members from the International Prayer Ministry gather outside the church to wait for prayers. This church is located in Nassau, south of the capital of the Bahamas, on a street overgrown with weeds and prone to water accumulation on rainy days. While everyone is waiting, a staff member will take their names and write them on a small pink piece of paper, which will then be placed in a box for the subsequent drawing. The 30 or so lucky people chosen will receive a sympathy package containing water and food.
The church is located far away from the luxurious resorts and golden beaches of the Bahamas. Due to economic difficulties, such aid materials are very precious. Church members cheered and clapped enthusiastically as staff handed out sympathy packages.
The church is led by Bishop Lawrence Rolle, known as the Singing Bishop for his passionate singing. The church relies on donations to support community food programs that provide assistance to thousands of residents each year. In early 2022, they received their largest donation ever: $50,000. The money came from FTX, a cryptocurrency exchange established in the Bahamas not long ago. In that time, FTX donated to several local nonprofits. Rolle said: The arrival of FTX is a great blessing for us. It has helped many poor people.
On Oct. 15, Rolle invited church members to testify during Sunday services — a ritual by which church members can publicly express their faith. At the beginning of the speech, everyone will first thank God for healing or guidance, and the tone will be steady. As the testimony progressed, the enthusiasm of church members gradually increased and their voices became louder, until it finally reached a climax: some speakers raised their arms to the sky and shouted Hallelujah, while others bent their legs. , began to twitch. A woman in black stood nearby, ready to catch anyone who might fall.
A few days ago, another kind of testimony was also taking place in Manhattan, New York. FTX founder Sam Bankman-Fried is on trial on seven counts of fraud related to the exchanges November 2022 bankruptcy. The court welcomed the prosecutions star witness, Caroline Ellison, CEO of FTX sister company Alameda Research (and Bankman-Frieds ex-girlfriend). Ellison said FTX spent billions of dollars on venture deals, personal loans, debt repayments, political donations and venture capital to build and polish the image of its founder, known as SBF. At the same time, according to Ellisons testimony, the money spent by SBF, possibly including the money received by Rolle Church, was actually stolen. The money originally belonged to FTX users.
As Rolle said, the money SBF donated to International Prayer Ministries is long gone. But the negative impact of the exchanges collapse on the Bahamas will last for a long time. Whether it is deserved or otherwise, the Bahamas reputation has been tarnished due to its close relationship with FTX. And local people like Rolle are caught in a conflict: they are grateful for FTXs contribution, but they are also worried that someone will come to ask for the money SBF spent here. Of course, they were also shocked by the alleged misappropriation of funds from FTX and the impact this whole thing had on their own countries. Nearly a year after the exchanges collapse, topics related to SBF and FTX have become taboo in the Bahamas - locals are extremely resistant to speaking out loud about these two notorious three-letter acronyms in public. Despite this, in order to boost the economy that has been hit hard by the new crown epidemic, the Bahamas government, which has relied on tourism development in the past, is still attracting investment in the crypto industry and continues to promote development plans to attract crypto companies.
For decades, The Bahamas has been euphemistically known as the International Financial Center. There is no income or corporate tax, making it an ideal place to set up a private bank or offshore company. The rapidly growing crypto industry is built on libertarian foundations and will struggle to gain traction in other jurisdictions. But this is a big opportunity for the financial services industry in The Bahamas. At the same time, this industry can also bring a group of young consumer investors to the Bahamas.
In 2020, in order to encourage crypto companies to settle in, The Bahamas promulgated a new regulatory system-the Digital Assets and Registered Exchanges Act (DARE), which is one of the first bills in the world tailored for crypto companies.
Attracted by the bill, FTX, one of the largest cryptocurrency exchanges in the world at the time, also decided to take advantage of the situation and go ashore. In September 2021, when the world was still gripped by the COVID-19 epidemic, FTX abandoned its home base in Hong Kong (the Hong Kong government implemented strict epidemic lockdown measures and regulators became increasingly cold toward cryptocurrencies), and chose to reopen in Nassau.
Philip Davis, Prime Minister of the Bahamas who was sworn in that year, said in a statement at the time: The arrival of FTX has started a new trend. We hope that more crypto companies will start to see the Bahamas as an ideal destination.
Davis said he believes FTX and the crypto businesses that will follow will improve the lives of local Bahamians by creating jobs in the Bahamas and investing in educational programs and other philanthropic endeavors. The Bahamas has historically relied heavily on tourism, which accounts for almost three-quarters of the countrys gross domestic product and employs half of its employed population. The Bahamas also suffers from severe wealth inequality. On the corner away from the resort, the streets are lined with abandoned buildings. These buildings have been hit by many hurricanes, and their windows are broken and empty bottles are scattered on the ground, making them a mess. It is estimated that 10 to 15 percent of the Bahamian population lives in poverty. Davis’ goal is to diversify the economy and allow Bahamians to live a “good life” by attracting crypto companies.
Over the next year, Davis and Bankman-Fried appeared together at several public events, such as FTX’s groundbreaking ceremony for its new headquarters and the 2022 Bahamas Crypto Conference. During the Bankman-Fried trial, relevant documents also revealed the close relationship between them: In a September 2022 email obtained by the U.S. Department of Justice, Davis asked SBF to propose to his son about an NFT project. suggestion.
Centered on FTX, Nassaus encryption ecosystem is gradually growing. In order to support crypto startups and raise awareness of the industry among Bahamians, Jillian Bethel and Davinia Bain, who previously ran a crypto ATM business in Nassau, established a shared workplace called Crypto Isle. FTX also encourages local entrepreneurs to apply for venture capital. Another large exchange, OKX, has also set up a branch in the country. At Bahamas Cryptocurrency Week, a steady stream of crypto industry leaders made The Bahamas seem to be the center of the crypto world, if only for a little while.
Bankman-Fried and his team live in Albany, a private gated community on the west side of New Providence Island, opposite the capital Nassau. FTX has invested more than $200 million in real estate in Albany and other similar communities, including a $40 million penthouse where Bankman Fried and other executives live, according to documents.
FTX employees “are quite showy,” said Michael Kong, CEO of the Fantom Foundation, another crypto venture. He lives in an apartment complex where FTX and its executives own seven properties. They were a group of well-known twenty-somethings who were throwing money around to show off. FTX employees would drive around Albany in golf carts with FTX logos on them, Kong added, It is said that This upsets the other residents who are used to peace and quiet. They are young children and are a bit wanton.
“They party like crazy,” said Dwayne Darling, a taxi driver who occasionally provides transportation for FTX employees or clients. “They rent big yachts and luxury resort suites and take speedboats to and from the Exuma Islands. Those Things are not cheap. When FTX guests needed to go to the Bahamas crypto conference, they told Darling, Send FTX a bill, send FTX a bill!
When Carlyle Bethel was in school, he and his friends used to play a game called Hot Potato. The rules are simple: when the music starts, everyone rushes to pass the ball around. When the music stops, whoever has the ball in their hands loses. Bethel is the founder of Nassau-based real estate investment startup Akerage. Until last year, he was working to integrate cryptocurrencies into his business, using tokens to split property ownership. Later, he gave up the idea. Bethel said the Bahamas became a hot potato when FTX collapsed.
In one week in November 2022, FTX experienced a thunderstorm and a complete collapse. There were reports of an improper relationship between the exchange and Alameda Research. In panic, users tried to withdraw their funds from the exchange. But when users started operating, they discovered that they could no longer get their money out. At this point, user funds had been secretly misappropriated, according to Bankman-Frieds criminal complaint. FTX employees fled the Bahamas, but reporters headed toward the islands in droves. The Bahamas’ financial regulator, the Securities Commission of The Bahamas (SCB), seized assets held by FTX Digital Markets, a subsidiary of FTX registered in the Bahamas, to ensure that the remaining assets would not be stolen by hackers.
On November 11, FTX filed for bankruptcy and SBF lost control of the company. A month later, he was arrested by Bahamian authorities and extradited to the United States to face trial.
Bethel said FTX’s collapse was “a bombshell for the entire industry,” casting a pall over the Bahamas and the entire crypto industry. FTX users (many of whom were ordinary people) collectively lost billions of dollars, while losses to its lenders and equity holders were in the hundreds of millions. FTX’s collapse also triggered a market rout that led to the collapse of other cryptocurrency companies; in addition, the incident also triggered a regulatory crackdown on the crypto industry by the U.S. government. Two cryptocurrency-friendly banks were also indirectly affected by this and announced their closure shortly after.
Bethel emphasized that if you want to calculate the losses caused by the FTX incident, you should also consider the impact of this storm on the future business development of other companies. “We had a great idea and got hit hard,” he said. “We heard about the amount of money FTX users were losing, and it was heartbreaking. But the billions of dollars in open cash losses were not All, because a lot of great companies are affected by this. Crypto startups have been affected globally, but in the Bahamas, the impact is doubled.
Tim Byun, director of government relations at OK Group, OKX’s parent company, said FTX’s collapse was a “pretty serious blow.” OKX only obtained a license to operate in the Bahamas a few days before FTX collapsed: I think this greatly hindered the development of the encryption ecosystem. Byun said that OKX still hopes to expand in the Bahamas, and he likes the countrys DARE system. But OKX also doesn’t intend to replace FTX and become the symbol of the country’s crypto space: “We have no ambition to be the crown jewel,” Byun said. “We have no intention to become the rock star of the Bahamas.”
Reputation damage is intangible and difficult to quantify. But the feeling among Bahamians working in the crypto space is that their country has been unfairly punished for its ties to FTX, and that the Bahamas’ role in the FTX farce has been mischaracterized.
“A lot of people blame the Bahamas for what happened, and that’s unfair,” said Stefen Deleveaux, president of the Caribbean Blockchain Alliance, an NGO that promotes crypto adoption in the region. But we all know this is traditional fraud.
Deleveaux believes international media coverage of the scandal was racist. Looking deeper, he said, there is a perception that a poor, predominantly black country allowed the wolf into the sheepfold, leading to a massacre. Deleveaux said its a feeling all of us locals can relate to, its uncomfortable.
In the days after FTX collapsed, the actions of the Bahamas regulator also raised questions from the outside world, but some said it was false reports. This originated from a tweet from the FTX Twitter account. The tweet, which stated that the SCB had instructed FTX to reopen withdrawals only to Bahamian users, was also reported by media outlets in the crypto industry. It was also reported that regulators required FTX to generate millions of dollars in new tokens and then hand them over to the Bahamas government. In a 500-page official document made public in December, the SCB refuted these claims.
Given the chaos of the situation, The Bahamas has adopted a silent, conservative stance on the FTX incident. Jillian Bethel, founder of Crypto Isle and former CEO of OKX in the Bahamas, said that initially, crypto industry players declined to comment on FTX to avoid “speculation” about the changing situation. But this attitude is understandable because foreign media are very sensitive to the depiction of the Bahamas. I dont think FTX is a hateful word, but it has definitely become a sensitive zone, she said.
In October of this year, as the SBF trial entered its second week, the Bahamas government hosted its first crypto conference, D 3 Bahamas. Journalists flew in for the event and spent a week studying the impact of FTXs collapse on the country. The conference was originally scheduled to be held in late January last year, but was postponed after the FTX incident. The conference was held at the Atlantis Resort on Paradise Island, north of Nassau. The conference sent a signal to the outside world: The Bahamas still wants to be the center of the crypto world.
The conference hosted by FTX last year can be said to be star-studded: football star Tom Brady, supermodel Gisele Bunchen, former US President Bill Clinton and former British Prime Minister Tony Blair were all key speakers. The convention looked dim by comparison, but the setting was still dazzling: Manta rays and other sea creatures swam around the resorts open-air aquarium; palm-lined beaches lined with clear waters; The luxury hotels are also all cartoony, like tropical Las Vegas. But the agenda was decidedly unattractive: massage breaks, sunrise yoga, discussions about effective altruism, mind sports, the SBF’s tricks were gone—all changes stemmed from regulation.
During his keynote the next morning, Davis did not talk about FTX. During a panel discussion, SCB executive director Christina Rolle described FTX as three cursed letters. Several other panelists avoided talking about it in tactful ways. Not because of FTX’s failure, but because of last year’s “unprecedented challenges.” Will Haskins, head of strategy and content, said the organizer, a company called Finoverse, had originally planned to host a panel on Learning Lessons from FTX but removed it from the agenda after consulting with the government to avoid Flirting existing conclusive conclusions about the incident will cause further trouble.
The SCB is updating its cryptocurrency regulations, with plans to enshrine a series of new provisions into law by the end of the year. At the D3 conference, the regulator said the changes reflected technological developments in the crypto world: “We know when we write the law that there are some things we can’t touch because we don’t understand them. We also know that the legislation must be flexible enough, To adapt to the needs of industry development, Rolle said during the panel discussion. However, the SCB did not directly admit that new rules, such as the mandatory segregation of customer and company assets, appear to be mechanisms specifically targeting FTX fraud. In the officially updated 83-page document, FTX was not mentioned.
The Prime Ministers Office did not respond to media requests for interviews. Rolle canceled the interview at short notice, citing scheduling issues. She agreed to be interviewed on the condition that no one asked about FTX.
The governments efforts appear to be paying off. Over the past year, 12 crypto businesses have registered under the DARE framework, bringing the total number of registered crypto companies in The Bahamas to 17, including large companies such as Bitfinex and Galaxy Digital. The companies influence remains small, but Davis believes a favorable regulatory environment will encourage them to expand. Everybody wants to come to the Bahamas, he said over dinner, and people are still flocking here.
Some Bahamian locals have reacted lukewarmly to the government’s decision to double down on the crypto industry. These days, it seems like if someone wants to do something bad, they come to the Bahamas, said retired Nassau native Don Armbriste. Armbriste had never heard of FTX before it collapsed, but he now worries the governments stance could attract Wrong business activities increase the risk of the Bahamas becoming involved in disputes again. Online, people feel much the same way. A recent Facebook post about OKX’s expansion in the Bahamas had its comments section flooded with criticism of the government’s eagerness to embrace the crypto industry. Most of the comments were: Here we go again. Another comment asked: Another FTX?
Other Bahamians remain skeptical of encryption. Rodney Moncur, talk show host and former senator of the Bahamian Parliament, said: Cryptocurrency is so new that many of us are just starting to understand it. I am against cryptocurrencies. I prefer cash.
Crypto business leaders operating out of New Providence Island hope that, over time, ordinary Bahamians will also embrace cryptocurrencies. “The quintessential characteristic of most emerging markets is the fear of the unknown,” said Jillian Bethel. “When the unknown becomes a black stain, someone will jump in to blame. But what doesn’t kill you only makes you. Stronger.
Meanwhile, with the next general election not until 2026, Kong said the timing of FTXs collapse could work in the Bahamian governments favor. “Politically speaking, there is still enough time for people to forgive the government for its mistaken trust in FTX,” Kong said. “Despite the embarrassment the FTX scandal brought to the government, the Davis administration did not take an anti-cryptocurrency stance. On the contrary, The government may be more supportive of cryptocurrencies now than it was before the FTX incident.”
Although The Bahamas has attempted to distance itself from the FTX incident, public dissatisfaction with FTX remains and has become more pronounced by its governments silent, conservative stance. Nassau native Anastasia Charlow said the common feeling among Bahamians is that Bankman-Fried took advantage of us.
Depending on how things unfold next, the SBF trial may be cathartic for some. Few ordinary people interviewed by the media said they were paying close attention to developments. Everyone is busy with other trivial matters in life. However, crypto industry players will be watching SBF’s every move closely — including any struggles he makes to defend himself.
I just want to know why, Carlyle Bethel said. FTXs founders lived a privileged life in the Bahamas, in stark contrast to the poverty in Nassau. The SBF life is a dream goal for many people, he said, but he squandered it all so easily. Why is that?
