‘Lack of understanding of business model’ saved A&B from damages of FTX fallout

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Sam Bankman-Fried (left) and Arthur Thomas
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By Elesha George

[email protected]

“Prudence” is what Prime Minister Gaston Browne has said prevented financial regulators in Antigua and Barbuda from moving ahead with licensing cryptocurrency exchange company, FTX Trade.

“They had no trading licence to do any business in Antigua. That licence was never granted even though an application was made,” he said.

“It spared us some embarrassment. I saw it as a missed opportunity initially,” he said, adding that in hindsight it was a good call by regulators.

FTX is listed as being incorporated in Antigua by key principal and former Director of Engineering at FTX Exchange, Nishad Singh, and headquartered in the Bahamas.

But while the Bahamas has addressed the matter head on, financial authorities here have so far been silent, perhaps still assessing the possible level of damage associated with FTX, after it filed for bankruptcy two Fridays ago.

Over in the Bahamas, the Supreme Court ruled to grant the Securities Commission the right to recover FTX damages and safeguard the assets of its customers and creditors.

This comes weeks after the Securities Commission suspended FTX’s registration and ordered that assets tied to the exchange be frozen. 

FTX is also under investigation by the US Securities and Exchange Commission and the Justice Department.

Observer has reached out to the local financial regulatory body, the Financial Services Regulatory Commission (FSRC), to determine if Antigua and Barbuda is likely to suffer any losses, financial or otherwise, from the company’s fallout.

For now, it seems that the damage is limited to the country’s reputation as a tax haven as, according to Prime Minister Browne, there has been “no regulatory breach”.

He said that although the parent holding company is “domicile” in Antigua, local financial regulators delayed the licensure process.

“When they made their application in 2021, the regulators here took the decision that they didn’t quite understand the business model,” he said, adding that it appeared to be “a one-man operation”.

As a result, the company was not licensed to operate within the twin island state pending the issuance of “particulars” that were necessary under the country’s Digital Assets Business Act.

“The particulars were slow in coming. In fact, the application remains under review but after what has happened, clearly, the regulators are unlikely to proceed now,” he remarked.

What we know

  • FTX, once the world’s third-largest crypto exchange, was valued at US$32 billion
  • FTX filed for bankruptcy in the United States
  • According to US court documents, the cryptocurrency exchange owes creditors US$3.1 billion
  • The company did not trade in Antigua and had no bank accounts here
  • Its 30-year-old founder and CEO, Sam Bankman-Fried, visited Antigua in February and spoke with Prime Minister Browne about the delay with licensing his company in the twin island state
  • Bankman-Fried has resigned

We also know that Arthur Thomas, who was until recently chairman of the Eastern Caribbean Securities Regulatory Commission (ECSRC) and Chairman of the government-owned Caribbean Union Bank (CUB) was named as one of three directors at FTX.

Browne claimed that international media was “not quite correct” in painting Thomas as a possible bad actor in the company’s collapse, and offered that Thomas is not responsible for the supervision of FTX and, instead, that was the job of the Eastern Caribbean Central Bank (ECCB) and the FSRC.

He said there is no evidence that Thomas was integrally involved in the crypto company.

“There’s no conflict there but because he’s a regulator for a stock exchange which regulates securities, they’re trying to make a link,” he said.

“I think they are somewhat confusing issues although I can accept that in hindsight that perhaps as chairman of the ECSRC that he should not have taken such a decision,” he added.

The prime minister revealed that Thomas, who is also Antigua and Barbuda’s ambassador to the Czech Republic, resigned as chairman of CUB just over one week ago.

In the meantime, Browne shared that the FSRC is working with international agencies and is reviewing whether it needs to appoint an administrator to oversee the holding company as the saga develops.

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