By LEANDRA ROLLE
Tribune Staff Reporter
lrolle@tribunemedia.net
ATTORNEY General Ryan Pinder last night defended the country’s digital asset regulations in the wake of international criticisms over its regime following FTX’s collapse, calling assertions that FTX only came to The Bahamas because it was a poorly regulated jurisdiction “shocking” and ignorant.
Mr Pinder also expressed disappointment over “inaccurate allegations” made by John Ray, FTX Trading Ltd’s new chief executive, who said he had “credible evidence” that the Bahamas government “directed unauthorised access” to FTX’s systems, and aided the withdrawal of digital assets.
Mr Ray made the claims in US court filings on November 17.
The Securities Commission has since shot down the characterisation, explaining that it requested control of FTX’s assets and upon court approval, had it transferred to a digital wallet under its management for “safekeeping.”
Yesterday, Mr Pinder called Mr Ray’s remarks “regrettable” and defended the Securities Commission’s decision to protect FTX Digital Markets’ assets for the benefit of clients and creditors.
“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 Ltd – 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 to do so,” Mr Pinder said.
“It is possible that the prospect of multi-million dollar legal and consultant fees is driving both their legal strategy and the intemperate statements. In any case, we urge prudence and accuracy in all future filings.”
The attorney general spoke on the FTX saga during a televised national address yesterday.
For much of his speech, Mr Pinder addressed international criticisms of this country’s digital asset regulatory regime and also hit out at false claims made about the FTX debacle.
FTX Digital Markets, which is headquartered in The Bahamas, was placed into provisional liquidation earlier this month after experiencing a liquidity crisis, sparked by clients’ simultaneous withdrawal of assets from FTX.
Following its liquidation, FTX, its sister company Alameda Research and dozens of other affiliates filed for a bankruptcy petition in Delaware and FTX founder Sam Bankman-Fried resigned as CEO.
Mr Bankman-Fried has since been replaced by Mr Ray who was appointed to the role after his resignation.
The firm’s collapse has since attracted international attention and sparked investigations by Bahamian and international law agencies, who are now looking to see whether customer funds have been misappropriated or mishandled and whether any laws were violated.
“As is provided for under our regulatory framework, we are already working with a number of specialists and experts, and will continue to do so as the need arises. There are a number of protective measures which the regulator has taken under the authority conferred by the Supreme Court of The Bahamas,” Senator Pinder continued.
“For the time being, we will not set out those measures in any further detail, until we are confident that doing so will not jeopardise any aspect of the ongoing investigations.”
As investigations continue, Mr Pinder advised authorities to exercise “prudence and restraint” while commenting on matters related to FTX, adding that “ill-informed speculation” will not be helpful to anyone involved.
He also hit out at those who have criticised the government for being “silent” on matters regarding FTX’s implosion, explaining that due to ongoing investigations, officials must be careful in how they respond to questions related to the embattled crypto currency exchange.
“The dozens and dozens of companies involved, registered in numerous jurisdictions across the world, the scope of related parties, including some of the world’s most sophisticated investors, demonstrate the cross-border, multi-jurisdictional nature of this event,” Mr Pinder said.
“And it is deeply misguided to conclude that reluctance to communicate the details of an active investigation means that nothing is happening; in fact, the government’s discretion stems from how seriously we take our commitment to the rule of law and the independence of the securities regulator.
“We have been shocked at the ignorance of those who assert that FTX came to The Bahamas because they did not want to submit to regulatory scrutiny; in fact, the world is full of countries in which there is no legislative or regulatory authority over crypto, but The Bahamas is not one of them.”
Mr Pinder added: “We have been able to assert our leadership in this new field because in the digital assets arena, what matters is not the size of your land mass, or the size of your GDP, but the ingenuity and rigour of your people and jurisdiction.
“When a respected risk and market integrity firm ranked the world’s digital assets regulatory regimes earlier this year, our country was first, and for good reason. The digital asset sector is a high profile, embryonic sector of the Bahamian financial services sector, an area where The Bahamas has demonstrated global leadership for decades. As a world-leading destination for tourism, we have been audacious before in asserting that ‘it’s better in The Bahamas.’”
“We will not hesitate to do so again,” he also said.
As for the future of the nation’s digital asset industry, Mr Pinder echoed comments similar to that of Prime Minister Phillip “Brave” Davis, saying he had every confidence The Bahamas will emerge from the FTX’s fall out “in even higher esteem.”
The attorney general also said officials believed this turbulent period will pass and that opportunities for more growth laid ahead for the sector.
“A turbulent crypto-currency period on a global basis, and the downfall of a single Bahamian company, in no way threatens a bright future for The Bahamas. Quite the opposite,” he added.
“Those entrepreneurs who are ready to create new financial products that serve a broader range of consumers, remain welcome to come to The Bahamas. They can be certain that we have in place a principled, fair, comprehensive and ethical regulatory regime. They can also be certain we will act quickly and decisively to enforce it, if and when our laws and regulations are breached. They will see that The Bahamas is a place of laws.
“They will see that the rule of law, and the exercise of due process, characterise the integrity of our jurisdiction. And they will have found yet another reason why, it’s better in The Bahamas,” he concluded.