The collapse of FTX cannot be laid only at “the Bahamas government’s feet”, CoinDesk’s Managing Editor for Global Policy and Regulation Nikhilesh De said during an online Coindesk show, where he contended that many people were caught off-guard by the cryptocurrency exchange’s reported misappropriation of customer funds, which led to its collapse two weeks ago.
When asked by the Coindesk show host whether The Bahamas is owed some sympathy regarding the collapse of Bahamas-headquartered FTX Digital Markets, he said there is some “sympathy to be had here”.
“Nobody seemed to have a clue as far as regulators were concerned, that there was this misappropriation of customer funds,” said De.
“I don’t think we can lay it down at just the Bahamas government’s feet. A lot of regulators and a lot of people really were caught off guard by the scope of FTX’s alleged misbehavior.”
Coindesk is a media site for “a global community engaged in the transformation of the financial system and the emerging crypto economy”, its website explains. De is one of the site’s most respected journalists.
Despite De’s commiseration for The Bahamas, he said the country’s handling of the FTX matter is what will ultimately determine how the rest of the world views the country, its digital assets ambitions and its regulatory environment.
He explained that if the investigation into the FTX matter and into former FTX Chief Executive Officer Sam Bankman-Fried is not perceived as being transparent and forthright, the sympathy for The Bahamas could begin to wane.
“I think there is some sympathy to be had here, but also in the wake of that, the questions come down to what exactly is happening now. And on that front, we don’t have a lot more clarity,” said De.
“I think that’s where you’re going to start seeing a lot more sympathy fade away.”
On Sunday night, Attorney General Ryan Pinder laid out the government’s position on FTX, giving a history of the company’s move to The Bahamas and a short overview of how it inevitably collapsed.
De and the Coindesk hosts explained that internationally, people are wondering if Bankman-Fried is under investigation, what the regulators are up to, and if The Bahamas has the resources to prosecute a possible massive bankruptcy case.
They also questioned if there could be some possible conflict in the country given that Pinder was once a Deltec employee. Information continues to grow in the FTX matter that suggests some kind of connection to FTX, though Deltec released a statement after FTX’s collapse contending that it never invested on the cryptocurrency exchange.
De said the FTX matter will be a “very complex procedure” for those investigating and will likely be a “very long and drawn out bankruptcy”.
