Bahamians figuring out country’s future after FTX’s collapse

Bahamians are trying to figure out the future of their country following the collapse of the crypto exchange FTX in November last year.

When FTX moved its headquarters to the Bahamas in 2021, Prime Minister Philip Davis attended the opening ceremony alongside FTX founder Samuel Bankman-Fried. Experts had said FTX's establishment in the Bahamas was an important step for the island country to be involved in the digital economy.

Earlier in 2020, Bahamian regulators came up with the Digital Assets and Registered Exchanges Act, making the Bahamas one of the first countries to regulate crypto and other digital assets. It was a step to diversify the island's economy, which had always relied heavily on tourism and banking.

"Their arrival was sort of the culmination of the work the Bahamians did to move in this direction," Caribbean Blockchain Association president and CEO Stefen Deleveaux said.

The Bahamas, like other countries in the Caribbean, is a haven for illicit and offshore transactions. The authorities had wanted to turn the island into a hub for crypto with the presence of FTX. Several other crypto companies also built their headquarters in the Bahamas.

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The COVID-19 pandemic negatively affected the Bahamian economy due to the lack of international tourists for almost two years. Several hotels, including the high-profile ones, also closed down as the pandemic hit.

Despite having resourceful nature and being one of the wealthiest islands in the Caribbean, economic inequality still plagues the country. Its central bank has reported that one out of five people in the Bahamas does not own a bank account.

Worldwide inflation also hits the Bahamas significantly. At the end of 2022, the government imposed price controls on multiple food items to ensure its people can still afford food staples amid inflation.

When FTX was still operating in the Bahamas, only elite Bahamians engaged with the company. Its activities were concentrated mainly in the secure luxury area called Albany, which hosts high-profile residents like golfer Tiger Woods and singer-actor Justin Timberlake.

"You don't casually wander into Albany," Deleveaux said.

Locals affected by FTX implosion

Many local firms are affected by FTX's bankruptcy because their businesses were linked with the defunct crypto exchange. For example, one food catering service admitted that it had let go of most of its employees because FTX was its biggest client.

According to locals, FTX hired local businesses and workers primarily for logistic works, like cleaning services, food catering and construction. Most workers for its core business were white people.

In addition to businesses, charity organizations also feel the impact of FTX's bankruptcy. FTX was one of these organizations' largest donors. Bishop Lawrence Rolle said his ministry received $50,000 from FTX in early 2022 to help solve food insecurity issues.

Rolle's ministry runs a food bank, which according to the bishop, costs more than $10,000 a week. He said FTX's donation money had all been spent within a month because "there's just too many hungry people" in the Bahamas.

FTX also donated money to other charities, including the Hands for Hunger and Agricultural Development Committee. People are debating whether these charities needed to return the donation money after the company went bankrupt. Some argued that the money was used for a good cause and therefore did not need to be returned.

Rolle, like many other Bahamians, described FTX's issue as a "distraction" for many issues prevalent in the country, like economic discrepancy and food insecurity. The bishop added that there would be "better companies than FTX" to help Bahamians.

Bankman-Fried is awaiting trial in the U.S. after being extradited from the Bahamas. The authorities in the Bahamas and the U.S. are trying to recover as many assets as they can. It is estimated that the loss will range from $8 billion to $10 billion.