The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s leader yesterday warned that the Government’s silence over the FTX crypto exchange’s implosion could “arm enemies of The Bahamas” with ammunition to inflict more damage on its financial services industry.

Michael Pintard told Tribune Business the Davis administration’s failure to “speak definitively” on the company’s collapse, and the actions The Bahamas has taken to protect investors, risks creating a “vacuum” that will be filled by the likes of the European Union (EU) and Organisation for Economic Co-Operation and Development (OECD) spinning “their own narrative”.

Both bodies have never hesitated to target and ‘blacklist’ The Bahamas in the past, and the Free National Movement (FNM) urged this nation to “guard” against allowing the duo and their fellow travellers using the FTX situation to further their anti-international financial centre (IFC) attacks.

“The Government has to speak to this issue to allay growing concerns that exist within the jurisdiction, particularly among Bahamian professionals and companies that have decided to do business here, even in the traditional financial services sector,” Mr Pintard said of FTX’s collapse into provisional liquidation and Chapter 11 bankruptcy protection in the course of a week.

“What the Government has to guard against is being slow to speak definitively to those that have concerns so we can allay any fears they have. We have a fairly solid regulatory environment, and have sought to comply with international requirements to guard against legal and reputational damage.

“What the Government must also guard against is not speaking to these recent developments and allow people to fill the vacuum with comments and speculation that can have unintended consequences; not just for the digital assets space but the whole financial services sector,” the Opposition leader continued.

“As a separate but related point, we don’t want to arm enemies of international financial centre jurisdictions, in this case The Bahamas.... We don’t want to give them space to write their own narrative about what is happening in this environment. We are a blue chip jurisdiction with having this regulatory environment.”

Asked whether by “enemies” he was referring to the likes of the EU and OECD, Mr Pintard replied: “I would make it broader than that. Those that make unfair demands of this jurisdiction; those that compete with this jurisdiction; those that don’t mean well to this jurisdiction. 

“We want to make sure we speak clearly to all stakeholders looking at the state of affairs with this company, and by them having their international headquarters here are looking at our jurisdiction. The concerns have been expressed by persons in the sector and we share their concerns. The Government has a role to play here, and ought to move with a sense of urgency in speaking to the myriad of concerns raised.”

The Bahamas is presently in the cross-hairs of both the EU, which has blacklisted this nation for allegedly being non-cooperative on international tax matters, and the OECD. The latter has branded this nation ‘non-compliant’ on aspects of automatic tax information exchange, and Mr Pintard has previously warned that both will likely try and drive this country out of the digital assets business.

The Government has thus far maintained a near-total silence over FTX’s collapse, and the placement of its Bahamian subsidiary, FTX Digital Markets, into the care of a provisional liquidator overseen by the Supreme Court. It has largely been content to leave any public utterances to the Securities Commission, as FTX’s primary regulator, who successfully obtained the appointment of Brian Simms KC, senior partner at the Lennox Paton law firm, to take control.

The fact the crypto exchange’s fate is now a court matter complicates the Government’s ability to speak on the collapse given that it could potentially prejudice the outcome of the provisional liquidation. Tribune Business understands that the Supreme Court case file on FTX has been completely sealed so as to prevent details of the company’s failure being accessed by the public.

Voicing confidence in the Securities Commission and other Bahamian regulatory agencies, Mr Pintard argued that Prime Minister Philip Davis KC cannot shy away from the FTX issue given that the Government’s blue carbon credit plans were “interwoven” with their listing and trading via the platform provided by the crypto exchange.

“He’s not in a position to delay addressing this and other pressing issues,” the Opposition leader argued. “ Much international media coverage, meanwhile, yesterday focused on reports that Sam Bankman-Fried, the FTX co-founder who has since resigned as its chief executive, allegedly placed a $40m penthouse at the Albany development up for sale on Friday which was when the crypto exchange filed for Chapter 11 bankruptcy protection in the Delaware courts.

However, Tribune Business sources, speaking on condition of anonymity because they were not authorised to speak publicly, said the ‘Orchid’ property was owned by FTX’s real estate arm, FTX Property Holdings, rather than Mr Bankman-Fried individually. This raises questions as to whether this could be sold, as it is likely that FTX Property Holdings is covered by the Bahamian provisional liquidation or Chapter 11 proceedings.

If so, its assets would be frozen and unable to be transacted. Surprise was also voiced by some that the ‘Orchid’ penthouse was being marketed by an Exuma-based realtor, Seaside Real Estate, rather than one of the high-end realtors in Nassau.

Seaside’s principals are Vernon Curtis and Pedro Rolle, the Exuma Chamber of Commerce president and Bahamas Power & Light (BPL) chairman. Sources said Albany liked to deal with particular realtors, making Seaside a seemingly odd choice for such a property.