Technology

Luxury villas, private jets and theft: FTX’s dark empire in the Bahamas

Published November 26, 2022, 13:00Updated November 26, 2022 6:56 pm.

It is at a temperature of 28 degrees overlooking the turquoise waters of the Caribbean Sea that the most hated person on the crypto-planet lives his exile. Beneath the veranda of his Albany penthouse, Sam Bankman-Freed has a familiar beach in front of him, the same one where James Bond emerges from the water in Casino Royale.

A fallen man in his thirties decided to set up the Bahamas headquarters for FTX, the cryptocurrency platform he founded and made famous in just three years, and endowed with a personal fortune of about $24 billion. The state has now become almost nothing. Following the exposure of fraudulent management, FTX was declared bankrupt on November 11 and currently has over a million creditors worldwide with $3.1 billion in debt to the top 50 creditors.

John Jay Ray III, the new CEO of FT X, put in charge of the company to try to fix the situation, can’t believe his eyes. However, someone who saw others in the Enron scandal admitted this in 2001: “never saw [dans ma carrière] such a complete failure of the company’s controls and such a blatant lack of reliable financial information,” adding that “its networks and financial interests in the Bahamas are not yet clear to me.”

“Effective Altruist”

SBF has made the Bahamas the FTX showcase for investors, influencers and regulators around the world. In April 2022, he stands with the Prime Minister of the Bahamas to inaugurate a $60 million campus construction to house 1,000 employees. A mutually beneficial partnership between an archipelago that dreamed of becoming a global crypto hub and a company that in return benefited from its benevolent fiscal system and the complacency of the authorities. The island has a regulated VRP cryptocurrency, obtained shortly before the CEO from Goldman Sachs. Following the exchange’s double-digit growth, David Salomon is meeting with SBF to discuss the IPO and the platform’s relationship with US regulators. A few months earlier, the ambitious SBF had admitted that it wanted to become the “biggest” platform in the world and that a purchase of Goldman Sachs was “not at all out of the question.”

He’s hosting a four-day conference that will bring together more than 2,000 people in succession, including big Wall Street bankers, politicians like Bill Clinton and Tony Blair, or celebrities like Tom Brady or Katy Perry.

Everyone was under the spell of Sam Bankman-Freed Freed, the “efficient altruist.” Through his pledge to bequeath 99% of his fortune, his long speeches about the priorities of combating global warming or eradicating disease, the sleazy-looking 30-year-old has earned a reputation as a billionaire philanthropist. The fired FTX boss then maintained the image of a disinterested ascetic, circulating pictures of him sleeping in a sleeping bag at his desk, or claiming he only drove a Toyota Corolla because he felt he didn’t need a car. Lamborghini. But once the disastrous management of the crypto platform is exposed, SBF reveals a much more cynical face. “All these stupid things that I said… It’s not true, not really,” he admitted to Vox media.

Monopoly in the Bahamas for $300 million

The FTX home was actually a roommate of thirty-odd Americans, a 1,000-square-foot penthouse with five bedrooms, six bathrooms, a marble bar, a private elevator with a security code, and an expansive terrace with an oval infinity pool. nine employees representing the ruling elite of the company. The company’s accounts will show that this property and a dozen others were paid for directly with FTX clients’ money, valued at $300 million, according to a lawyer for the bankrupt firm. According to Reuters, SBF has acquired at least 19 properties in the Bahamas worth $121 million. Along the Caribbean coast, he, in particular, offered himself 7 apartments for 72 million dollars. And his favorite mode of transport: a $30 million Gulfstream G450 private jet that he flew back and forth across the continent.

The FTX deposits were effectively managed as the personal legacy of the Californian, who also did not hesitate to sign title deeds for some of these assets in the name of those parents. Joyfully reaching into the pockets of his clients, he also took out a billion-dollar loan from Alameda Research, a trading firm for FTX. A system that also benefited other platform employees such as Nishad Singh, head of development at FTX and close to management, who would receive a $550 million loan.

His philanthropy was ultimately just a method of communication. “That’s what the reputation is based on to some extent. I feel sorry for those who were fooled,” says Sam Bankman-Fried. A reputation that allowed him to opt for the American authorities, one who made himself the cantor of regulation before ridiculing him unchecked. “In fact, there is no one there to make sure that good things happen and bad things don’t happen. […] Just communication. Damn regulators. They make everything worse. They don’t protect customers at all.”

Now the authorities of the Bahamas are in turmoil. The Bahamas Financial Authority has admitted that it is behind the withdrawal of $477 million from FTX’s treasury the day after it was declared bankrupt, to digital wallets directly managed by archipelago authorities. A measure taken to keep customer funds “safe” in the Bahamas, but not to the taste of the US authorities in charge of the file in the United States. There is currently a jurisdictional battle between US and Bahamas regulators over the sovereignty challenge in the FTX case.

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