Bahamas' Attorney General Defends Country's Regulatory Regime Amid FTX 'Debacle'

Ryan Pinder disputed the notion that FTX moved to the country because it didn't want to "submit to regulatory scrutiny."

AccessTimeIconNov 28, 2022 at 2:31 a.m. UTC
Updated Nov 28, 2022 at 6:51 p.m. UTC

The Bahamas "is a nation of laws," the country's attorney general said, defending the nation's actions in the wake of crypto exchange FTX's collapse.

During a 23 minute pre-taped speech, Ryan Pinder, who is also a senator and the minister for legal affairs, summarized FTX's collapse and alluded to the Bahamas' government's actions, while also seeking to reassure investors and tourists that the country was a safe place to visit and operate a business.

FTX founder Sam Bankman-Fried liked and retweeted the Office of the Prime Minister of the Bahamas' tweet on the speech. Bankman-Fried moved FTX's headquarters to the Bahamas last year.

The Securities Commission of the Bahamas moved "swiftly" by suspending FTX Digital Markets' license, appointing provisional liquidators and later on, securing FTX Digital Markets' assets "to be held on behalf of and for the benefit and restitution of clients and creditors of FTX," Pinder said.

"It is important for me to share this summary of what took place, because over the last few weeks, the basic facts have been obscured by guessing games and rumors," Pinder said. "We understand the enormous interest in this story, but as a government, we decided right away that what was most important was not to engage with speculation or gossip, but instead to proceed methodically and deliberately in accordance with the exercise of due process and the rule of law."

Pinder reiterated that the Bahamas won't share further information about ongoing civil and criminal investigations of FTX for fear of compromising the probes.

The official also echoed the commission's previous remarks complaining that new FTX CEO John Ray III "misrepresented" the government's actions. In a court filing, Ray and FTX's attorneys accused the Bahamas' government of ordering "unauthorized" transactions. The commission claimed that the actions were taken to protect FTX's funds.

"We urge all authorities here and abroad at a minimum to exercise at least the same amount of prudence and restraint in their public commentary as we do so as not to prejudice any of the proceedings that are ongoing," Pinder said.

"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 Limited – 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 they had filed to do so."

"It is possible that the prospect of multimillion dollar legal and consultancy fees is driving both their legal strategy and their intemperate statements."

The bulk of Pinder's speech focused on arguing that the Bahamas' regulatory regime was sufficient to oversee crypto businesses. He claimed that no other regulator could move as quickly as the Securities Commission had and said there are no global standards for crypto regulation.

Pinder also appeared to take a dig at the turf war in the U.S. between the Securities and Exchange Commission and the Commodity Futures Trading Commission by referring to countries that lack regulators with statutory authority to oversee crypto markets. He asserted that the Bahamas maintains "global leadership" as a tourism destination and jurisdiction for startups.

Ratings agency Standard and Poor's has forecast a "stable outlook" for the country's economy, anticipating "no material adverse impact" from FTX's collapse, Pinder said

"Any attempt to lay the entirety of this debacle at the feet of the Bahamas, because FTX is headquartered here would be a gross oversimplification of reality," he said. "We have been shocked at the ignorance of those who have said that FTX came to the Bahamas because they did not want to submit to regulatory scrutiny."

FTX filed for bankruptcy earlier this month after the exchange imploded. Its collapse was triggered by a CoinDesk report that called into question the stability of Alameda Research, a trading firm affiliated with FTX.


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Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.