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 accusing Bankman-Fried of undermining reorganization efforts with “incessant and disruptive tweeting.” They also raised the suggestion that some FTX assets were ordered to be transferred to the Bahamian government after the bankruptcy filing.
For the island nation, the collapse of 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.
“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 New Providence, the island home to Nassau. “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.”
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 the turmoil wasn’t preventable under its regulations. Its securities commission on Thursday said it took control of digital assets of FTX Digital Markets—which it said isn’t part of the US bankruptcy—for safekeeping. The regulator on Nov. 12 denied directing the entity to prioritize withdrawals for Bahamian clients.
In a statement to Bloomberg News on Friday, Davis said that his government had taken “swift and immediate action” on FTX, and that the nation would continue to court the digital-asset industry.
“It was because the Bahamas had in place a robust regulatory framework for digital assets and digital asset businesses, that the regulator was able to take immediate steps in order to protect the interests of clients, creditors, and other stakeholders globally, and particularly those of FTX Digital Markets Ltd.,” the prime minister said.
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. 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 Thursday 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 and its golf course was designed by Els. Bankman-Fried’s five-bedroom penthouse, which has its own swimming pool, was listed for nearly $40 million prior to FTX’s arrival.
In an August interview on Bloomberg’s “The David Rubenstein Show: Peer-to-Peer Conversations,” Bankman-Fried described the Bahamas as “pretty easy to live in,” noting that he’s recognizable in Nassau but also is able to walk down the street and has privacy there. Asked about the “dorm situation” in his penthouse, he said it’s a useful way to socialize and unwind in the evening.
“I don’t have enough sort of free time to, like, really put a lot of thought into engineering a social life,” he said. “So it’s—it’s useful if it’s just sort of there passively.”
FTX also made efforts to build local roots. The company, in partnership with a local nonprofit, had committed to expanding and revitalizing a community center in Nassau’s Bain & Grants Town, a landlocked district that’s poorer than some of the waterfront areas.
The project called for new space for educational programs and food-distribution services, with work expected to be completed by the fall. But little was done besides paying for landscaping on the grounds, a person with knowledge of the matter said.
Residents say the government heralded FTX’s arrival. It promoted “the fast-paced expansion and presence of FTX HQ in Nassau as an opportunity for Bahamians,” said Charles Johnson, 44, who owns one of the island’s CrossFit gyms, Da Box.
“But many Bahamians couldn’t honestly say that they engaged with the platform in a substantive way,” he said. “It was still mostly a platform for foreign investors.”
Perhaps the peak of excitement came in late April, with the celebrity-packed Crypto Bahamas summit and the ceremony for the new FTX headquarters. At the groundbreaking, Bankman-Fried tweeted a picture of the view of turquoise water and Davis touted the “positive footprints” the company has made throughout the country.
Since moving to our shores, @FTX_Official has left positive footprints throughout The Bahamas. Today, they continue to make positive impressions with the groundbreaking of their new headquarters. I look forward to attending the grand opening of the FTX Bahamas headquarters. pic.twitter.com/vWxzMoN9jm
— Philip Brave Davis (@HonPhilipEDavis) April 25, 2022
Davis kicked off the Crypto Bahamas conference days later, saying the country is “not only open and ready for business, but moving to the forefront of this most exciting era of digital asset innovation,” according to a news story in the Nassau Guardian. The event, sponsored by FTX and SALT, attracted the likes of Bill Clinton, Tony Blair, Tom Brady and Katy Perry. Tickets reportedly started at $3,000 a head.
Franklyn Lightbourne, 52, who operates a tour company and taxi-cab service in Nassau, said within 24 hours after the news of FTX troubles circulated in the local press, he began to book passengers who made their first question to him: “Do you or anyone you’re picking up have an FTX account?” The driver went on to explain that some of the visitors were trying to find ways to get money off the platform through locals who might be able to help or held assets of their own.
“It was as if pirates had landed on our shores in hopes to find gold,” he said.
—With assistance from Steven Church.