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EDITORIAL: Blaming The Bahamas instead of crypto industry

IN the fallout over the collapse of FTX, there has been quite a lot of talk about The Bahamas and its role in the whole affair – much of it completely unfounded.

A regular columnist for The Tribune shared one such article from the Washington Post published yesterday, saying that the article eviscerated The Bahamas.

The article, by a columnist from Bloomberg, said that the location of the FTX headquarters in The Bahamas was the first clue when it came to reasons to be wary of the company.

However, the article itself is nothing but a rehash of old news. By the third paragraph of the article, the author is reaching back to the 17th century and the pirate days of the Caribbean.

It may not be the most startling observation you will ever read in this column, but the management of cryptocurrency businesses in 2022 is as far removed from knowing how to shorten your sails as you try to escape a British naval vessel in the 17th century as you could imagine.

The closest the author gets to the modern day is in pointing out blacklisting by the EU, but without getting into the reasons why such moves occurred or the efforts made in The Bahamas to remove such restrictions.

Such criticisms would be like cautioning a tea-making company from opening a business in the US because of the country’s history of tossing tea chests into Boston harbour.

A lot of the criticism that has been circulating is nothing more than innuendo and rumour – with some of it perhaps rooted in racism too.

There has been a shortage of specific allegations. The most pointed concern raised was about the move by the Securities Commission to transfer assets to secure them – but given by his own words FTX founder Sam Bankman-Fried said that FTX reopened withdrawals despite not having approval to do so and in defiance of a court order forbidding it, the commission clearly had good reason to secure assets.

While people have been pointing fingers at The Bahamas, perhaps it is because they don’t want to point those fingers at the crypto industry itself. If you’re involved in such a business after all, as an investor or as an entrepreneur, perhaps you don’t want the scrutiny to come your way that was plainly lacking for FTX.

So far this year, the following crypto businesses have gone bankrupt – Celsius Network Ltd, Babel Finance, CoinFlex, Voyager Digital, Vauld, Zipmex, Hodlnaut, FTX and BlockFi. And others have been rocked by what has been called a “crypto winter”.

Most of those were not based in The Bahamas – it just happens that the most high profile of them to fail was based here. The scale of the losses have caught the world’s attention, but it is unclear – so far – what any other jurisdiction in the world would have done differently that would have stopped the collapse. Mr Bankman-Fried has blamed himself, and apologised – so what could The Bahamas have done about it?

That is a question that deserves an answer – for as we have opened our doors to digital asset companies, we will want to learn how to prevent another such collapse. But the industry itself also has questions to answer about how it can prevent another FTX – whether it is based in The Bahamas, the US, the UK, or anywhere around the world.

There may well be valid criticisms to be made – but anyone who wants to run up a pirate flag at the start of any supposed analysis is not someone you need to listen to.

Tributes

The Tribune continues to receive condolences and tributes following the passing of managing editor Eugene Duffy – for which we are very thankful and which we shall communicate to his family.

Charlie Harper, who writes the Stateside column in today’s Tribune, said of Eugene: “He was at his core an idealist who never lost faith in his conviction that newspapers in particular could still make a real difference in the lives of their readers, even in - and maybe especially in - the age of the internet and smart phones. He could have become a hardened cynic. But he didn’t.”

He said Eugene was “a man who could look fierce and talk bluntly, he retained an enduring sentimentality. A loyal man with a tender side, he deployed his tough exterior when it served a higher purpose. But that isn’t who he was at his core.”

Those wishing to send tributes can also email them to letters@tribunemedia.net.

We thank you for your kindness.