FTX’s Burst Bubble Is Very Bad News For The Ruling Progressive Liberal Party - PLP in The Bahamas

Actually, FTX is already becoming the daily topic of discussion of national focus in The Bahamas – and we have at least three solid years to go before the next general election.  It looks like a rough ride ahead on the FTX wave with ‘Brave’ – in my humble estimation. Like the song goes: Oh Sam – oh Sam, by damn – by damn. 

By Dennis Dames
Nassau, NP, The Bahamas

The full financial, social and political impact of FTX’s collapse is far from being known – in my view.  One thing is certain, and that is a multitude of ordinary hardworking folks throughout the world have lost their whole life savings – or a significant portion of it as a result of FTX’s burst bubble.

It’s the worst case of betrayal of public trust that I have seen in my lifetime.  Many of the clients concerned – are expressing their frank and honest emotions in social media circuits as the FTX saga plays out in bankruptcy court; and their sentiments are far from nice and pleasant. 

All of this is happening while the former loose cannon CEO of FTX continues to add fuel to the fire in the press and on social media platforms.  He simply cannot keep his friggin trap shut!

There are already reported cases of suicides and assassinations relating to the demise of FTX in countries around the world, and the situation is looking grimmer by the minute.  The complete fallout from FTX’s failure is unknown, but one thing if for sure, and that is many politicians – especially in the USA have a lot of questions to answer for the general voting public in regards to FTX failed crypto exchange.  

It will have a great influence on the next Presidential election in the United States and the next round of midterm congressional elections – in my opinion.  Trump is going to have the time of his life – I can imagine.  Wow wow we waa!

Politicians in The Bahamas will also have a lot of voters questions to answer, and FTX could be the main subject of concern moving in to the next general election season in The Bahamas.  This is totally bad and unwanted news for the ‘New day’ administration – no doubt.

Actually, FTX is already becoming the daily topic of discussion of national focus in The Bahamas – and we have at least three solid years to go before the next general election.  It looks like a rough ride ahead on the FTX wave with ‘Brave’ – in my humble estimation. Like the song goes: Oh Sam – oh Sam, by damn – by damn.  

FTX will adversely affect a good number of governments in our universe – as more and more horrific details of its internal operations are publicly revealed. It’s a budding international scandal of monumental proportions.  Let’s face it, as it’s not going anywhere soon.

FTX Digital Markets Ltd (“FDM”) - Under The Control of a Court-appointed Fiduciary in The Bahamas

The Securities Commission of The Bahamas will continue to investigate the facts and circumstances regarding FTX’s liquidity crisis and any potential violations of Bahamian law and hold any responsible companies and individuals accountable, in cooperation with other regulatory agencies and law enforcement both in The Bahamas and in other affected countries in connection with their own investigations

Securities Commission of The Bahamas 

Poinciana House
North Building, 2" Floor
31A East Bay Street
P.O. Box N-8347
Nassau, The Bahamas

Securities Commission Statement on Transfer Motion In FTX Digital Markets Chapter 15 Proceedings

Nassau, The Bahamas, Wednesday 23 November 2022 - The Securities Commission of The Bahamas (“the Commission”) issues the following statement with respect to certain remarks made by FTX Trading Ltd. and certain of its affiliates, in connection with their motion to transfer the venue (the “Transfer Motion”) of the Chapter 15 proceedings of FTX Digital Markets Ltd. (“FDM”) that were commenced to assist the provisional liquidators appointed by the Supreme Court of The Bahamas in the discharge of their duties with respect to FDM.

FDM was incorporated in the Commonwealth of The Bahamas on 22 July 2021; it was duly registered as a digital asset business under The Bahamas’ Digital Assets and Registered Exchanges Act, 2020 (the “DARE Act”).

Pursuant to Bahamas law, on 10 November 2022, the Commission determined that the customers and creditors of FDM were in need of the protection of the DARE Act, and suspended FDM’s license to conduct business and subsequently filed a petition before the Bahamian Supreme Court to place FDM into provisional liquidation. This action — the first commenced globally against an FTX entity — placed FDM under the control of a court-appointed fiduciary and removed prior management from exercising any authority over FDM.

Given the nature of digital assets, and the risks associated with hacking and compromise, the Commission determined that placing FDM into liquidation was not sufficient to protect the customers and creditors of FDM.  Accordingly, on 12 November 2022, the Commission sought an additional Order from the Supreme Court of The Bahamas for authority under the DARE Act to transfer all digital assets of FTX into digital wallets under the exclusive control of the Commission for the benefit of clients and creditors of FDM.

It is unfortunate that in Chapter 11 filings, the new CEO of FTX Trading Ltd. misrepresented this timely action through the intemperate and inaccurate allegations lodged in the Transfer Motion.  It is also concerning that the Chapter 11 debtors chose to rely on the statements of individuals they have (in other filings) characterized as unreliable sources of information and potentially “seriously compromised.”

Further, the statements made by the purported officers of FTX Trading Ltd. and the other purported Chapter 11 debtors — that they have suffered significant thefts, that their systems were compromised, and that they continue to face new hacking attempts — reinforces the wisdom of the Commission’s prompt action to secure these digital assets.

The Commission will continue to evaluate the situation, continue to act in accordance with directions issued by the Supreme Court of The Bahamas, collaborate with other supervisory authorities and take such further actions as needed to preserve the assets of FDM and to safeguard the interests of customers and creditors of FDM.

In addition, the Commission will continue to investigate the facts and circumstances regarding FTX’s liquidity crisis and any potential violations of Bahamian law and hold any responsible companies and individuals accountable, in cooperation with other regulatory agencies and law enforcement both in The Bahamas and in other affected countries in connection with their own investigations.  The Commission also looks forward to continuing to cooperate with the authorities in other jurisdictions to ensure the cooperative and vigorous resolution of all necessary proceedings to effectuate those ends.

Source

BAHAMIAN PRIME MINISTER'S Communication to The Bahamas Parliament Concerning THE FTX GROUP AND AFFILIATES

Bahamas Prime Minister's Communication to Parliament Concerning FTX

As you know, the FTX group has one entity which is regulated in The Bahamas, FTX Digital Markets Limited. This entity’s registration has been suspended and it was put in provisional liquidation.

HON. PHILIP DAVIS QC, MP

PRIME MINISTER & MINISTER OF FINANCE

COMMONWEALTH OF THE BAHAMAS

16 NOVEMBER 2022

Madam Speaker:

Numerous crypto tokens and companies around the world have collapsed in the past few months, including Terra/Luna, Celsius, 3 Arrows Capital, and Voyager Digital, setting off a series of reverberations.

As you know, the FTX group has one entity which is regulated in The Bahamas, FTX Digital Markets Limited. This entity’s registration has been suspended and it was put in provisional liquidation.

The FTX group and affiliates all now appear to be subject to insolvency proceedings pending in Nassau and in the United States.

There are reports that FTX has mismanaged customer assets, and numerous investigations have begun into the reported actions and actors in several countries, including by our own Securities Commission and the Financial Crimes Investigation Branch. I note that The Bahamas did not have sole oversight of FTX’s worldwide operation.

I have given directions that these proceedings and investigations are to be of the highest order and given precedence, given the amounts involved and because committed and rigorous oversight is of national importance.

We will be coordinating these efforts with duly appointed authorities in other jurisdictions.

A key priority for us, of course, is the full and absolute protection of the rights and remedies of The Bahamas and our citizens, to minimize losses and to mitigate the overall impact caused by any misconduct.

Madam Speaker:

There have been both booms and busts in the world of crypto, and this year has been a significant bust – with total market capitalization falling from $3 trillion to $800 million or lower; the steep sell-offs and declining volumes have led analysts to describe this time as a “crypto winter”. (Meta and Amazon, not crypto companies, of course, but tech companies – have laid off thousands, and also shed significant market cap. These are challenging times.)

I believe, as do many others, that blockchain technology and smart contracts will continue to play an important and growing role in the world’s financial architecture, and further, I have every confidence that The Bahamas will emerge from the proceedings involving FTX – proceedings taking place here as well as in other jurisdictions -- with an enhanced reputation as a solid digital assets jurisdiction.

Based on the analysis and understanding of the FTX liquidity crisis to date, we have not identified any deficiencies in our regulatory framework that could have avoided this.

In fact, it was because The Bahamas already had in place a regulatory framework for digital assets and digital asset businesses, that the regulator was able to take immediate steps in order to protect the interests of clients, creditors, and other stakeholders globally.

The Bahamas was already on track to update the regulatory framework, before year’s end, to address lessons learned as a result of this year’s crypto winter.

No doubt, as the various jurisdictions involved unravel the actions that led to this moment, we will be among the first jurisdictions to gain and put to use valuable insights, allowing us to further strengthen our framework.

What I would ask, Madam Speaker, is for all those who care about our country’s reputation, to tread carefully when they speak about matters that are very complex and still unfolding.

There is a reason that The Bahamas won international praise for the approach we have taken to date on digital assets, and there is also plenty of room to have a healthy debate about the industry, but this is a story that has the world’s attention, and those who use it to mislead and score cheap political points are no patriots.