As a cryptofintech fundraising in a hurry Details of Sam Bankman-Fried’s crypto empire in the Bahamas have surfaced after being exposed to the collapse of FTX. This includes a luxury gated resort penthouse and a $60 million headquarters that was never built.
luck Reporter Leo Schwartz spent most of the last week in the Bahamas. fake list for the penthouse abandoned construction siteexploring crypto exchanges tie Report to the Bahamas government and FTX employees luxury life.
In the midst of his rapid-fire reporting, I called Schwartz for a few minutes yesterday to talk about what he uncovered. We discussed how the collapse of FTX affects locals in the Bahamas and how Twitter and cryptocurrency sleuths have helped push the FTX story forward. (Portions of this Q&A have been edited for clarity and brevity)
Term Sheets: Last week we did a report on FTX in the Bahamas. What kind of energy was there? Wherever you went, were people talking about FTX and its demise?
Schwartz: My main lesson, especially my conversations with everyday Bahamians and Bahamian entrepreneurs in the crypto space, was mostly resignation. I think many people who are familiar with politics and news in the Bahamas were clearly quite shocked to see a $32 billion company vaporize overnight and it happened in their own backyard. But at the same time, what I was trying to convey with this story is that I think this happens a lot in places like the Bahamas, which is an offshore country trying to attract companies like FTX. As they told me they very wealthy people move there for their own motives and needs, take away what they need and leave sick in bed as one told me Or are you used to making a lot? money and stay. Again, it’s clearly not at the level of fraud or overnight money evaporation, but I think it was almost a sense of resignation that this is something that happens so often.
I was also surprised that I spoke to people who had never heard of it. They go like this: What is FTX? And I have to explain that it was this company based here that was worth over $30 billion overnight. I think their first reaction was shock. And their second response was, ‘That’s really sad. is just another day.
Many people wonder if self-proclaimed competent altruist Sam Bankman Freed lived a life of luxury in the Bahamas. As you put it in one of your stories, you “get to know the pervasive hypocrisy and dark secrets that make up the island world of cryptocurrency tycoons.” Please tell us what you found during your stay.
Spending by FTX and Sam Bankman-Fried was rampant in two ways. Again, the Bahamian government was trying to attract companies like FTX, especially in the digital assets space. So in 2020 we passed a law to allow digital asset companies to move there. That’s ultimately why FTX moved from Hong Kong to the Bahamas. And I think SBF and FTX learned the rules of the game very quickly. There has been speculation among politicians and power insiders that a number of political donations have been made, although they have not yet been made public.
But the money was still spent.For example, renting out the ballroom for Prince William’s royal visit. [social] The culprit was the daughter of someone who was a major power figure in the ruling party.
And, like you said, Sam Bankman-Fried radiates a super-thrifty persona. He said in interviews that I’m not much of a consumer.I don’t really need fancy cars or anything. But at the same time, he was living at this luxury resort called Albany, which has a private megayacht slip, with 11 restaurants that are permanently closed. Host a golf tournament with Tiger Woods, [SBF] I was living with a buddy in a $30 million penthouse. And as we learned from former FTX employees from the Bahamas, FTX employees could get whatever they needed or wanted on a whim. They have a lot of Bahamian hired in logistics roles and this employee tells me, for example, [they] I saw on Slack that someone requested a toenail clipper and they got it right away.So this was the type of lifestyle they lived, with parties and comped food and groceries they wanted. [SBF] tell publicly.
You went to a resort yourself, right?
I tried Again, it’s private. Especially this week, I think they’re nervous because there were a lot of journalists in the Bahamas and they were all trying to get access. A bunch of journalists on the go. I made many calls to make it happen. Some journalists managed to get on board. But when I taxied up to the gate, the guard shook his head and told the taxi driver that he should know better.
How important was FTX in particular to the entire Bahamian crypto ecosystem?
Note that with a few exceptions almost no country has strong crypto regulation globally. [legislation] In late 2020, they were able to attract FTX shortly thereafter.Interestingly, the month [FTX] I came to the Bahamas in September, the same month the current Prime Minister came to power. But when they came, they were actually the first major global digital asset or crypto company to come to the Bahamas. It was really touted as a reason to become the next global crypto hub to compete with other countries in the world.
FTX has promised to build a massive headquarters, a $60 million headquarters. There was a prime minister for that. They hired a lot of Bahamian companies. The prime minister said hundreds of jobs would be created as a result. It turns out that construction never actually took place. To prove it, I was able to speak to a local construction company who was hired as a management company. But during this year and a half, the ruling party has certainly touted his FTX as the Bahamas coming to this global scene. And FTX was the first major company. The second company was exchange OKX, which had just set up an outpost in the Bahamas, but there are many questions as to whether this would clearly set the country back and damage its reputation going forward.
what impact do you think This will impact the crypto business ecosystem in the Bahamas. many years ago?
There’s a reason FTX chose the Bahamas, right? And they’re doing many aspects of their successful business for a while so they can do the derivatives type trading that they’ve been doing. has been allowed. But at the same time, as people have said, this really puts a stain on the country and I think the Bahamas will be associated with FTX for a while …that the main regulator, the Bahamas Securities Commission, is doing. I think there’s a lot to try to build on that reputation. The fact that they are currently in a jurisdictional dispute with the US makes it pretty wild.
You discovered that the Albany SBF penthouse property listing that was posted was in fact fake. Every time something like this happens, there is a lot of misinformation online. Do you have any advice for people trying to be affected by FTX? How can you be sure what’s true and what’s not?
I think a lot of people are rightly pointing out that much of this story is happening right in front of Twitter. From cryptocurrency founders to blockchain analysts to anonymous detectives, many people who are clearly not journalists provide incredible information that moves the story forward.
At the same time, as we saw in this story, I think there is a lot of misinformation and up-to-date information being circulated. [real estate listing] The story was originally posted by an anonymous account on Twitter. This account has garnered a lot of attention and does a very impressive work named ‘Capital for Autism’. It went viral for obvious reasons. You see, it was in Sam Bankman-Fried’s flashy lifestyle. There’s also an element of Schadenfreude about him having to sell his beloved penthouse. But there were also plenty of warning signs that it wasn’t true. For example, the Bahamas Securities Commission froze assets belonging to his FTX, and many properties were owned by his FTX. So how do we actually put this up for sale? That’s one of the reasons I started digging into it, and through some reports, I found out that the listing was fake.
I think the lesson, obviously, is that Twitter is an incredible resource. And a lot of kudos to the folks at Twitter for doing a lot of the work journalists can’t or don’t. It has a role to play and much of this article is driven by great journalism. Apparently, it was all triggered by his CoinDesk story about his FTX balance sheet. wall street journal, financial timesBloomberg, and of course, luckI think it’s very important for readers to understand that the role of the journalist is to verify information and find information that is apparently not found by other members of the public. Twitter and Journalism I think it’s fascinating what’s happening in both areas.
Please be careful…In honor of the Thanksgiving holiday, term sheets will be closed for a few days. You can expect this newsletter to arrive in your inbox early on Monday, November 28th. May the rest of your week be filled with mashed potatoes.
Jackson Fordyce curated the sale section of today’s newsletter.
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