Crypto paradise becomes a nightmare for the Bahamas

FTX found a home in the Bahamas in part because of its streamlined crypto rules

- Katanga Johnson and Jim Wyss

Years before Sam Bankman-Fried became a household name by building and blowing a billion-dollar cryptocurrency empire, he was on the hunt for a new corporate home in the Caribbean. In April 2019, his company, FTX Trading Ltd., registered in Antigua and Barbuda, a nation of tiny, idyllic islands 1,400 miles southwest of Florida.

But when FTX applied for permits to operate its flagship crypto exchange, the government balked. "Regulators here took the decision that they didn't quite understand the business model," Prime Minister Gaston Browne told local news outlets in November, shortly after FTX's collapse. "Apparently it was a one-man operation-so they never proceeded to license it."

Antigua's reluctance now looks wise. Questions are swirling around the Bahamas' attempt to establish itself as a crypto hub with a regulatory structure that allowed entrepreneurs to quickly register and gave them wide latitude once operational. The rules sought to filter out illicit actors such as money launderers. In hindsight, though, they failed to account for seemingly well-intentioned entrepreneurs such as Bankman-Fried, whose actions-whether criminal or simply careless-would bankrupt his company, imperil countless others and cause billions in customer and investor losses. The reputation of the Bahamas and its crypto ambitions could be among his most prominent victims.