The Tribune

The Democratic National Alliance’s (DNA) former leader is urging The Bahamas not to “abandon” the digital assets industry in the wake of FTX’s implosion but instead promote the jurisdiction with “even more vigour”.

Branville McCartney told Tribune Business that to “give up” on its ambitions for the sector now would simply provide critics attacking The Bahamas in the wake of the crypto currency exchange’s collapse with extra ammunition, while any work done to restore the country’s tattered reputation would “be in vain”.

Calling on the Davis administration to “pull out all the stops” to counter the negative onslaught sparked by FTX’s now-US chief executive, John Ray, and members of the US congress, he warned it “not to tarry” given that The Bahamas’ integrity was being unfairly “sullied” by widespread international media coverage.

“The fact is the reputation of The Bahamas has been sullied as a result of it, and we ought to do whatever is necessary to try and regain that reputation, telling people how it’s safe to invest in our financial services industry,” Mr McCartney told this newspaper of FTX’s implosion and the subsequent arrest/jailing of its founder, Sam Bankman-Fried.

“I think they [the Government] need to pull out all the stops in that regard. I think overall they’ve been fairly quiet. I think a lot more can be done. I think they ought not to tarry; they ought to act as quickly as possible, recognising we need to build trust in the international sector in terms of investing in The Bahamas.

“Speak about the situation, show they’re doing everything to remedy it. What they want to do is instill and ensure confidence in persons. That is done by being open about the situation, explaining exactly what happened. A lot of people around the world hear The Bahamas is involved, but many find the need to paint The Bahamas in an unfair light. This could have happened anywhere. It just so happened we’re the country where it happened.”

Mr McCartney, who declined to give specifics on how The Bahamas should counter the FTX spotlight, added: “Negative publicity spreads quicker than positive. We have to show the positive light of investing in The Bahamas and how you go about it.”

Asked whether he believes FTX’s failure will deter, and prevent, The Bahamas from realising its ambitions to establish itself as a digital assets hub for the Caribbean and wider Western Hemisphere, Mr McCartney replied: “I hope it doesn’t. I think we need to pursue it with even more vigour and vibrancy. It is lucrative, it attracts investors and that is what we need.

“The fact we have had this incident should not cause us to close down. You go and advertise and promote The Bahamas, bring our reputation back. To abandon the crypto industry, then all your work to get the reputation of The Bahamas back will be in vain.

“Just like any business, if something goes bad you don’t give up. You learn from it, maybe improve on it, learn from your mistakes and go full throttle ahead in trying not to make the same mistake again. I do believe that, at the end of the day, we’ll come out from it but we cannot give up. We do need to push forward and work on enhancing the country.”

Many observers will argue that The Bahamas needs to guard against more investors of Mr Bankman-Fried’s type after the FTX co-founder was charged with a litany of fraud and other financial crimes, including money laundering, by US Justice Department prosecutors in the southern New York federal district. He also faces civil lawsuits from US regulators, the Securities & Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC).

Meanwhile, representatives for FTX’s Bahamian joint provisional liquidators and the Securities Commission last Thursday met counterparts representing Mr Ray and the 134 entities in Chapter 11 bankruptcy protection in Delaware in a bid to try and resolve their differences and tone down the heated rhetoric between them as they battle for jurisdictional control of the crypto exchange’s winding-up and its assets.

The parties reported the talks to Judge John Dorsey, sitting in the Delaware Bankruptcy Court, the following day. John Zakia, a US attorney representing the joint provisional liquidators, revealed his clients had modified their demands over the restoration of their access to cloud-stored data on FTX Digital Markets that was previously cut-off by Mr Ray.

He confirmed Brian Simms KC, the Lennox Paton senior partner, and PricewaterhouseCoopers (PwC) accounting duo of Kevin Cambridge and Peter Greaves, would be “seeking static access, not live access” to this data. It is unclear what “static” access means, although it likely restricts the joint provisional liquidators to simply looking at documents and files rather than downloading them or taking copies.

With Judge Dorsey prepared to hear witness testimony and evidence on January 6, 2023, if the two sides cannot agree on data access, Mr Zakia added: “We want your honour to be able to deal with all of these issues in a timely manner. It’s going to prejudice our clients if these matters get pushed off indefinitely.”

John Bromley, the attorney for Mr Ray, had earlier objected to hearing the joint provisional liquidators’ bid for Chapter 15 recognition as the main bankruptcy proceedings on January 13, 2023, due to the need to take discovery from witnesses who were in The Bahamas.

“It sounds like the parties are talking to each other.... Hopefully the parties can resolve it. If not, I’m prepared to go forward on the 6th,” Judge Dorsey asserted.