Trouble in the Bahamas following FTX collapse: Report

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Following the collapse of crypto exchange FTX, which was headquartered in the island country of Bahamas, Bahamians are reportedly still trying to find a way to make sense of everything, while remaining optimistic about the future.

According to a report by the Wall Street Journal, the island country — which had encouraged cryptocurrency companies to feel at home with their “copacetic regulatory touch” — has been rocked by the implosion of FTX. 

The Bahamas was hard hit by Hurricane Dorian in 2019 and the pandemic shortly afterward in 2020 and was already struggling to find ways to strengthen its economy, which relies heavily on tourism and offshore banking for a bulk of its gross domestic product. It appeared that the prime minister of the Bahamas, Philip Davis, and his government believed crypto could play a critical role in the island’s economic recovery.

Now, the community is suggesting that FTX’s sudden implosion has left a trail of unemployment on the tiny 80-square-mile island. When functioning at full capacity, FTX provided employment for locals, reportedly spending over “$100,000 a week on catering,” and also set up a private shuttle service to transport workers around the island. FTX also hired a number of local Bahamians in areas such as logistics, events planning and regulatory compliance, according to the WSJ. 

With the collapse of FTX, many high-spending foreigners who worked for the company and once boosted the local economy have reportedly fled the island, leaving Bahamian security guards to now guard “nearly vacant buildings.”

Related: SBF, FTX execs reportedly spend millions on properties in the Bahamas

In the aftermath of the fall of FTX, some crypto community members have said they feel no sympathy for the effects of the collapse on the tiny island country.

Hacker News user Matkoniecz commented, “Given that Bahamas help rich people and companies to evade taxes, my sympathy to negative consequences of that are limited.” 

Meanwhile, Exendroinient00 shared, “Nothing wrong with inviting every scammer to do scamming on your islands,” likely in reference to the island’s laws that seem to incentivize offshore banking activities.

On Oct. 18, Cointelegraph reported that the Bahamas‘ securities regulator ordered the transfer of FTX’s digital assets to a wallet owned by the commission “for safekeeping.”

According to a statement from the Royal Bahamas Police Force sent to Reuters on Nov 13, an investigation into possible criminal misconduct over the insolvency of FTX is underway by financial investigators and Bahamian securities regulators.