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'The money is gone': Bahamas tries to turn the page after FTX

techsm5

Dressed in a canary blue suit on a hot December night, sweat dripping from his brow, Bishop Lawrence Rolle sings the words to his latest hit song for the hundreds of children and adults gathered to celebrate Christmas.

“FTX!” he sings, leaning over and shaking his head for emphasis. “The money is gone!”

“FTX!”, her backup vocalist and audience shout back. “The money is gone!”

Cryptocurrency exchange FTX was meant to be the crown jewel of the Bahamas government’s push to be the global destination for all things crypto, after years of having an economy overly dependent on tourism and the bank. Instead, FTX is bankrupt and Bahamians are trying to figure out what’s next for their country and whether their national crypto experiment has failed. Regulators are trying to locate missing money from FTX customers.

Meanwhile, charities like Rolle and dozens of now-unemployed entrepreneurs are hoping that another business will come along and bring new opportunities to the island nation, without the complications and embarrassment of an alleged business fraud. a billion dollars.

Rolle, a Pentecostal preacher known as “The Singing Bishop”, is a prominent figure in the Bahamas. For decades he cooked and donated food to the poor and provided school meals in his neighborhood kitchen at the International Deliverance Praying Ministry in Over-The-Hill, one of the poorest neighborhoods in the capital of Nassau. Rolle and his staff feed around 2,500 people a week.

Rolle had been invited by Kirby Samuel, the director of Mount Carmel Preparatory Academy, to sing as part of the school’s Christmas celebration. His act consisted mostly of half a dozen Afro-Caribbean gospel songs, but one number stood out – his social media success over the recent collapse of FTX.

Rolle’s ministry received $50,000 from FTX in early 2022, one of many donations FTX made to the Bahamian people as it moved to the Caribbean island nation in 2021. It was cash, he said, which was used to restore a food storage trailer and make more food donations. Rolle said it costs more than $10,000 a week to run his food donation program.

Asked about FTX’s failure, Rolle described it as a sad distraction from the many problems facing the country. Others are angry, especially with Sam Bankman-Fried, the young founder of FTX. The Bahamas had a reputation, like some other Caribbean islands, as a destination for illicit and offshore finance. It was believed that crypto would allow the island to diversify its economy, give Bahamians more financial opportunities, and overall help provide the country with a more prosperous future.

The country enacted the Digital Assets and Registered Exchanges Act in 2020, making the Bahamas one of the first countries to put in place a regulatory framework for cryptocurrencies and other digital assets. Prime Minister Philip Davis attended the groundbreaking ceremony for FTX’s new $60 million headquarters in Nassau in April, along with Bankman-Fried.

“Coming here was sort of the culmination of the work Bahamians have done to move in this direction,” said Stefen Deleveaux, president and CEO of the Caribbean Blockchain Association.

Several other crypto companies and startups are headquartered in the Bahamas, some of them in an incubator known as Crypto Isle not far from downtown Nassau.

Deleveaux said he became interested in crypto as early as 2014 and mostly tried to focus his organizations’ efforts on the non-commercial parts of crypto, like blockchain technology, financial inclusion, and uses. technologies. He remains skeptical of cryptocurrency trading.

“It’s frustrating. Now when people think of crypto, they’re going to think of FTX,” Deleveaux said. “It’s going to make my own job a lot harder.”

In some ways, FTX was both ubiquitous and remote from the local community, Bahamians said. His advertisements were everywhere, including at Nassau airport in the tourist arrivals hall. But at the same time, FTX ran most of its operations from the secure luxury resort known as Albany, where residents like Tiger Woods and Justin Timberlake can be regularly spotted. Albany is located on the other side of New Providence, the most populated island in the Bahamas and the location of Nassau.

“You don’t casually stroll around Albany,” Deleveaux said.

A bartender at the Margaritaville Resort, where FTX racked up an unpaid tab of $55,000, described a group of 10 to 15 mostly white FTX employees eating at the restaurant, their faces buried in their laptops the whole time. Although FTX hired Bahamians or contracted with Bahamian companies, it was almost entirely for logistics jobs like construction, janitorial services, or catering.

Just as quickly as FTX took root in elite circles in the Bahamas, it all fell apart. FTX spectacularly went bankrupt in early November, going from solvent to bankrupt in less than a week. A restaurant service said it had to lay off most of its employees after the bankruptcy of FTX, its biggest contract.

Bankman-Fried, 30, was arrested last month in the Bahamas and extradited to the United States to face criminal charges in what US attorney Damian Williams called “one of the biggest frauds in American history”. The floppy-haired crypto entrepreneur has been released on bail and is set to stand trial in October.

Meanwhile, law enforcement and regulators in the United States and the Bahamas, along with attorneys and new FTX management, are trying to figure out how much investor and customer money “is gone,” as Bishop Rolle often repeats this in his song. Estimates of the amount of money lost in the FTX collapse have varied widely as some assets are still being recovered, but one estimate puts the losses at around $8-10 billion.

“Like the rest of the world, I’ve been glued to my television set ever since (FTX) collapsed,” Mt. Carmel manager Samuel said in an interview.

Other Bahamians, however, said FTX’s collapse had distracted from the ongoing problems facing the Caribbean country.

The Bahamas’ economy has been strained during the coronavirus pandemic. The country effectively banned outside visitors for nearly two years and only started letting cruise ships dock at its popular dock about eight months ago. In Nassau, there is ample evidence of the economic toll of the pandemic. The British Colonial Hotel, best known for being the site of the James Bond film ‘Never Say Never Again’, was shuttered and closed in February. Rooms used to cost $400 a night there.

Despite miles of pristine beaches, beautiful resorts and the richest economy in the Caribbean, the Bahamas remains a country riven by inequality. Taxi drivers spoke of the inability to get even a $6,000 loan to buy their own vehicle. About one in five Bahamians do not have a bank account, according to the country’s central bank.

Late last year, the Bahamian government had to impose price controls on dozens of food staples in a desperate attempt to curb inflation.

FTX officials seemed to recognize food and hunger as a problem to be solved in order to develop goodwill with its new neighbors. Along with donating $50,000 to Rolle’s ministry, FTX donated $250,000 to Hands for Hunger and donated $1.1 million to a new nonprofit known as the Agricultural Development Committee. , focused on strengthening the country’s food security. Committee founder Phillip Smith did not respond to multiple requests for comment on the donation.

As FTX filed for bankruptcy, Bahamian media speculated that Rolle may have to return the $50,000 donation, which he said was spent about a month after it was received.

“We pinched that money as best we could, buying flour, rice,” Rolle said. “There are just too many people who are hungry.”

“It’s a tough question for the bishop, but I think everyone in the country will agree on one thing: whatever they gave him, he didn’t spend on himself. “said Samuel of Mount Carmel.

“I just wish there were better companies than FTX,” Rolle said. “Many of our children don’t have parents, or we have parents who have two, four or five children, or the children don’t have a father. We can barely afford to feed them. I pray to God that someone will come and give more.

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