The Bahamas' Attorney General Defends Country's Regulatory Regime Amid FTX 'Debacle'

The Bahamas "is a nation of laws," the country's attorney general said, defending the island's actions in the wake of FTX's collapse.

During a 23 minute pre-taped speech, Ryan Pinder, who is also a senator and the minister for legal affairs, summarized FTX's collapse and alluded to The Bahamas' government's actions, while also seeking to reassure investors and tourists that the country was a safe place to both visit and operate a business. FTX founder Sam Bankman-Fried liked and retweeted the Office of the Prime Minister of The Bahamas' tweet on the speech.

The Securities Commission of The Bahamas moved "swiftly" by suspending FTX Digital Markets' license and appointing provisional liquidators, and later on, securing FTX Digital Markets' assets "to be held on behalf of and for the benefit and restitution of clients and creditors of FTX," Pinder said.

"It is important for me to share this summary of what took place, because over the last few weeks, the basic facts have been obscured by guessing games and rumors," Pinder said. "We understand the enormous interest in this story but as a government, we decided right away that what was most important was not to engage with speculation or gossip, but instead to proceed methodically and deliberately in accordance with the exercise of due process and the rule of law."

Pinder reiterated at various points during his speech that The Bahamas would not share further information about ongoing civil and criminal investigations for fear of compromising them.

Pinder also echoed the commission's previous remarks complaining that new FTX CEO John Ray III "misrepresented" the government's actions. In a court filing, Ray and FTX's attorneys accused The Bahamas' government of ordering "unauthorized" transactions. The commission claimed that these actions were in fact to protect FTX's funds.

"We urge all authorities here and abroad at a minimum to exercise at least the same amount of prudence and restraint in their public commentary as we do so as not to prejudice any of the proceedings that are ongoing," Pinder said. "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 Limited – 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 they had filed to do so."

"It is possible that the prospect of multimillion dollar legal and consultancy fees is driving both their legal strategy and their intemperate statements."

The bulk of Pinder's speech focused on arguing that The Bahamas' regulatory regime was sufficient to oversee crypto businesses. He claimed that no other regulator could move as quickly as the Securities Commission had, said there are no global standards for crypto regulation, appeared to make a dig at the U.S.'s SEC/CFTC turf war in referencing countries with a lack of regulators with statutory authority to oversee crypto markets and asserting that The Bahamas maintains "global leadership" as both a tourism destination and as a jurisdiction for startups.

Standard and Poor's even forecast a "stable outlook" for the country's economy, anticipating "no material adverse impact" from FTX's collapse, Pinder said, after praising The Bahamas' laws around cryptocurrency regulation.

"Any attempt to lay the entirety of this debacle at the feet of the Bahamas, because FTX is headquartered here would be a gross oversimplification of reality," he said. "... we have been shocked at the ignorance of those who have said that FTX came to the Bahamas because they did not want to submit to regulatory scrutiny."