NASSAU, BAHAMAS — A senior forensic accountant said yesterday that FTX’s collapse should serve as a “teachable moment” but will not be a “body blow” to this nation’s digital asset hub ambitions.
John S Bain cited The Bahamas’ entry into the digital assets space as the reason he decided to merge his practice with fellow accountant Philip Galanis back in May.
Bain said: “This will definitely have an impact on the reputation of The Bahamas but I don’t think it’s going to damage the country’s reputation in any way.
“FTX was not formed in The Bahamas yesterday. They are from Hong Kong, they are also regulated in the US and were able to attract people like Bill Clinton and Tony Blair and investors like Tom Brady. They had their ducks in a row. They were seen in all the crypto magazines as being a genuine company. If they were formed in The Bahamas it would have a much more damaging effect,” Bain continued.
“I don’t think it’s a body blow. I don’t think it’s going to have a lasting effect but there will be some effect. I think the government should continue with their digital aspirations, strengthen the DARE Act and let this be a teachable moment.”
A team of investigators from the Financial Crimes Investigation Branch is said to be working closely with the Bahamas Securities Commission to investigate potential criminal misconduct surrounding the collapse of the crypto-exchange FTX. FTX Group announced on Friday that it filed for Chapter 11 bankruptcy in the United States, along with the resignation of its 30-year-old founder and CEO Sam Bankman-Fried.
Bankman-Fried has been replaced by Enron liquidation lawyer John J. Ray III. FTX has reportedly claimed in filings that it has between $10 billion and $50 billion in estimated liabilities and assets.
On Saturday, FTX general counsel Ryne Miller announced FTX US and FTX.com had initiated precautionary steps to move all digital assets to cold storage. Miller said the process was expedited to mitigate damage upon observing unauthorized transactions.
FTX said analysts flagged that hundreds of millions of dollars of assets had been moved from the platform in “suspicious circumstances”.
Meanwhile, the Securities Commission of The Bahamas (SCB) has refuted claims by FTX that it has been facilitating withdrawals in accordance with Bahamian regulations.
It follows reports that desperate FTX users began bribing Bahamian users to help withdraw frozen funds after Zane Tuckett, former FTX Head of Institutional Sales, revealed local users could still take funds off the platform.
Last week, the SCB took action to freeze assets of FTX Digital Markets and related parties, as the crypto exchange has collapsed. Brian Simms, K.C. (Lennox Paton Counsel and Attorney-at-Law) has been appointed as provisional liquidator.
Bain continued: “The provisional liquidator disappointed to protect the dissipation of assets. When you have a situation where there is a bankruptcy claim you always appoint a provisional liquidator. What they do is they cancel the Board of Directors and take control of all bank accounts.
“You can appoint a provisional liquidator quickly by just going to the court on a single action. Sometimes you have to act quickly and the provisional liquidator puts the fire out and protects the assets. Eventually, a full liquidator will be appointed.”
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