Collapse of FTX puts focus on Bahamas, where ex-CEO had his HQ in penthouse
Sam Bankman-Fried loved living in the Bahamas. Shacked up in his luxury penthouse with nine FTX colleagues, he could wander Nassau without being hassled.
And the Bahamas loved Bankman-Fried, the prestige of his crypto empire and the potential fortunes that it would bring.
Their relationship, which had seemed innocuous, is now under the spotlight after FTX’s rapid demise, with lawyers for the crypto exchange raising the suggestion that some FTX assets were ordered to be transferred to the Bahamian government after the bankruptcy filing.
The lawyers also accused Bankman-Fried of undermining reorganization efforts with “incessant and disruptive tweeting” that appears aimed at moving assets away from control of the U.S. court in favor of one in the Bahamas.
For the island nation, the collapse one of its most visible companies is a blow to a years-long effort to build a digital-currency hub. Interviews with local residents show FTX’s presence was quickly felt in the little over a year since it moved to Nassau, even if they didn’t take part in a platform largely used by foreign investors.
“FTX had been the emblem of what many saw as an emerging crypto boom in the Bahamas,” said Amauri Frantz, a trader who resides on the island. “None of the investment community here on the ground would have had a reason to doubt FTX’s ability to realize the dream of the Bahamas becoming a crypto hub.”
ISLAND’S BIG PLANS
That much was clear seven months ago, when Bankman-Fried and Bahamas Prime Minister Philip Davis broke ground on a site that was meant to be a sprawling compound for 1,000 FTX workers, complete with a hotel and school. It symbolized the island’s growing stature in the crypto world, coming the same week digital-coin enthusiasts, celebrities and politicians descended on Nassau for a glitzy summit.
The scene on the ground looks much different these days.
The site sits largely empty. The early outlines of a building foundation have been poured. A few cabins are sprinkled about for the construction crew, though no one was there on an afternoon this week.
The Bahamian government has said changes to its regulatory framework wouldn’t have prevented the turmoil. In a statement Nov. 17, the Securities Commission of The Bahamas said it took control of the assets of FTX Digital Markets Ltd., which isn’t part of the U.S. bankruptcy, for safekeeping. The regulator said Nov. 12 that it hadn’t directed the entity to prioritize withdrawals for Bahamian clients.
Davis’ office didn’t respond to requests for comment. In a speech to parliament Nov. 16, he said he had “every confidence that the Bahamas will emerge from the proceedings involving FTX — proceedings taking place here as well as in other jurisdictions — with an enhanced reputation as a solid digital-assets jurisdiction.”
The Bahamas, home to about 400,000 people, has played a pioneering role in experimenting with e-money — in 2020, it launched the sand dollar, one of the world’s first central bank digital currencies, beating China’s digital renminbi to the market by six months. But FTX’s decision to move its headquarters there in September 2021 was a coup. Bankman-Fried told the crypto publication Blockworks that he was attracted to the country’s friendlier regulation and less-stringent Covid restrictions than Hong Kong, where it had been located.
FTX made it clear it planned to be there for the long haul as it started buying up real estate throughout western Nassau. As the company made aggressive claims to office space at Veridian Corporate Centre, locals started getting a sense they were seeing something unusual.
“You can bet your bottom dollar everybody sat up and paid attention,” said Nikki Boeuf, president of the Bahamas Real Estate Association and a broker at Berkshire Hathaway HomeServices Bahamas.
The company started buying luxury residential properties, too, making “a big splash in a small pond” of the island market, said Boeuf, who wasn’t involved in any of the transactions but has spoken to agents who were.
PURCHASES SURFACE
Only some of the property purchases have surfaced publicly, including at least $74.2 million on condos, houses, office space and land in 2022, according to a document reported by The Block.
Real estate purchases were called out in a bankruptcy-court filing Nov. 17,
by FTX Group’s new chief executive officer, John J. Ray III, who blasted the company’s faulty oversight and misuse of corporate funds. Some of the real estate was recorded in the personal names of employees and FTX advisers, he wrote.
Many of the homes were within the confines of the Albany Bahamas club, owned by billionaire British businessman Joe Lewis, singer Justin Timberlake and golfers Tiger Woods and Ernie Els. One of the world’s four casts of Arturo di Modica’s Charging Bull sculpture — made famous from its perch in Lower Manhattan — sits near the resort’s marina.
Bankman-Fried’s fivebedroom penthouse, which has its own swimming pool, was listed for nearly $40 million prior to FTX’s arrival.
In an August interview, he described the Bahamas as “pretty easy to live in,” noting that he’s recognizable in Nassau but also could walk down the street without bother.