Sam Bankman-Fried Built a Crypto Paradise in the Bahamas—Now He's a Bad Memory

FTX staff lived the high life in the Bahamas. Following the exchange's high-profile collapse, the country is trying to rebuild its reputation.
Swat member following escort
Police SWAT members follow behind the SUV carrying FTX co-founder Sam Bankman-Fried from the Magistrate's Court on December 21, 2022 in Nassau, Bahamas.Photographer: Joe Raedle/Getty Images

The Trial of Sam Bankman-Fried

Each Sunday morning, the congregation of the International Deliverance Praying Ministry gathers in front of their church, ready to be let in. It’s a modest building in the southside of Nassau, the capital of the Bahamas, on an overgrown and potholed street that floods when it rains. While they wait, a member of the church comes around to take names and write them onto small, pink slips of paper. The slips are folded, tucked into a box, and later drawn in a lottery. The 30 or so people selected are given a care package of water and groceries.

In this part of Nassau, out of view of the opulent resorts and sandy beaches for which the Bahamas are known, provisions like these are scarce because money is tight. As the care packages are handed out, the congregation hollers and applauds.

Led by Bishop Lawrence Rolle, known locally as the Singing Bishop for his animated vocal displays, the church relies on donations to fund its community feeding program, which serves thousands of people each year. In early 2022, it received the largest single donation in its history: $50,000, given by cryptocurrency exchange FTX, which had set up in the Bahamas a few months earlier. This was one of tens of contributions the company made to local nonprofits around that time. “FTX was a blessing,” says Rolle. “It helped a lot of poor people.”

On October 15, Rolle began Sunday service by inviting church members to give testimony—a public profession of their faith. The speeches began steadily, with thanks to God for an act of healing or guidance, then they increased in fervor and volume to a point of climax. Some speakers threw their arms skyward, shouting “hallelujah,” while others bent double and began to convulse. A woman dressed in black stood nearby, ready to catch anyone who might fall.

A few days earlier, in Manhattan, New York, a different kind of testimony had taken place. FTX’s founder, Sam Bankman-Fried, is standing trial on seven counts of fraud in connection with the collapse of the exchange in November 2022. The courtroom was packed for the prosecution’s star witness, Caroline Ellison, CEO of FTX’s sibling company, Alameda Research (and Bankman-Fried’s former girlfriend). FTX had spent billions of dollars on risky trades, personal loans, debt repayments, political donations, and venture bets, and on glossing the image of its founder, Ellison said. But that money—and therefore possibly the money received by Rolle’s church—had been stolen, according to Ellison. It belonged to FTX customers.

The money FTX gave to the International Deliverance Praying Ministry may be “long gone,” as Rolle puts it, but the exchange’s demise has left a lasting imprint on the Bahamas, which, deservedly or otherwise, have been tarnished by association. Locals like Rolle were left conflicted, at once grateful for FTX’s contributions, fearful someone might come asking for the money back, and appalled by the alleged theft and its implications for their country. Almost a year after the collapse, the now-infamous three-letter acronyms—SBF and FTX—are spoken aloud only reluctantly in the Bahamas; the topic has become taboo. Nonetheless, under pressure to inject life into an economy dependent on tourism and hit hard by the Covid pandemic, the government is forging ahead with its plan to attract crypto businesses to its shores.

Tourists at a beach in Nassau, Bahamas.Photographer: Victor J. Blue/Bloomberg/Getty Images

The Bahamas have for decades been what’s euphemistically known as an “international financial center.” The country has no income or corporation tax, making it an attractive place to set up a private bank or offshore company. The fast-growing crypto industry, built on libertarian foundations and facing a hostile reception in other jurisdictions, represented the perfect opportunity to add another string to the Bahamas’ financial services bow and attract a younger group of spenders to the country in the process. In 2020, to encourage crypto businesses to relocate, the country enacted a new regulatory regime, the Digital Assets and Registered Exchanges (DARE) bill, one of the first in the world to offer clear rules for crypto firms. The plan worked.

FTX—then one of the world’s largest crypto exchanges—was a big fish to land. In September 2021, deep into the Covid pandemic, the company abandoned its base in Hong Kong, where the government had imposed a strict lockdown and regulators were cooling on crypto, to set up shop in Nassau.

“FTX has started what we hope will be the beginning of a trend,” the Bahamian prime minister, Philip Davis, who was sworn in that year, said in a statement at the time. “We hope that more companies within the cryptocurrency and blockchain spheres begin to see the Bahamas as an ideal destination.”

Davis said he believed that FTX and the crypto businesses that followed would create employment opportunities and invest in education programs and other charitable causes that would improve the prospects of local Bahamians. The Bahamas are heavily dependent on the tourism industry, which accounts for almost three-quarters of the country’s gross domestic product and half of its employment. The country also suffers from immense wealth inequality. Away from the pristine resorts, streets are lined with derelict buildings, battered by one hurricane season too many, their windows broken and floors strewn with empty bottles. An estimated 10 to 15 percent of people live in poverty. But by attracting crypto businesses, Davis aimed to diversify the economy and “increase the prosperity” of Bahamians.

Over the following year, Davis and Bankman-Fried made a handful of public appearances together—when FTX broke ground on its new headquarters and at the exchange’s 2022 Crypto Bahamas conference, which was attended by celebrities, sports stars, and former political leaders. Documents presented at the Bankman-Fried trial pointed to their close relationship: In an email from September 2022, acquired by the US Department of Justice, Davis asked Bankman-Fried to help advise his son on an NFT project.

Around FTX, a crypto scene began to crystallize in Nassau. To foster crypto startups and host educational events for Bahamians, a coworking venue called Crypto Isle was established by Jillian Bethel and Davinia Bain, who previously operated a crypto ATM business in Nassau. FTX invited local entrepreneurs to submit applications for venture funding. OKX, another of the world’s largest exchanges, opened a subsidiary in the country. For the week of Crypto Bahamas, the luminaries of the crypto industry descended, making the country look like the center of the crypto world, if only for a little while.

The Crypto Isle crypto business co-working space in Nassau, Bahamas in December 2022.Photograph: Victor J. Blue/Bloomberg/Getty Images

Bankman-Fried and his staff set up in Albany, a private, gated community on the west side of New Providence island, at the opposite end from Nassau. FTX spent in excess of $200 million on properties in this and similar developments, filings in the bankruptcy case show, including on a $40 million penthouse where Bankman-Fried himself lived with other executives.

FTX staff “were kind of show-off-ish,” says Michael Kong, CEO of the Fantom Foundation, another crypto organization, who lives at an apartment complex in which FTX and its executives own seven properties. “They had a reputation for being young twentysomethings that threw a lot of money around to show how much they had.” Staff would tear around Albany in FTX-branded golf carts, says Kong, and were rumored to have upset the other residents, who were accustomed to peace and quiet. “They were young kids going a little crazy,” he says.

“They were partying, man. They were ballin’,” says Dwayne Darling, a cab driver who occasionally ferried FTX staff or guests. “They were renting out big yachts, suites at [luxury resorts], and taking speed boats back and forth to the Exuma Islands. Those things ain’t cheap.” When guests of FTX needed a ride to the Crypto Bahamas conference, says Darling, they told him to “bill them, bill them, bill them.”

Cruise ships docked at a port in Nassau, Bahamas in December 2022.Photograph: Victor J. Blue/Getty Images

When Carlyle Bethel was at school, he and his friends used to play a game called Hot Potato. The rules are simple: A ball is passed around in a circle to music, and whoever is left holding it when the music stops, loses. Bethel is the founder of a Nassau-based real estate investment startup called Akerage. Until last year, he was working to integrate crypto into his business, using tokens to fractionalize property ownership. He has since dropped the idea. When FTX fell, Bethel says, the Bahamas was left holding the hot potato.

In a single week in November 2022, FTX unraveled completely. Customers were spooked by reports alleging improper ties between the exchange and Alameda Research and tried to withdraw their money. But they couldn’t. According to the criminal indictment against Bankman-Fried, that’s because it had been secretly spent. FTX employees fled the island; a throng of reporters traveled in the opposite direction. The Securities Commission of the Bahamas (SCB), the country’s financial regulator, seized the assets held by FTX Digital Markets, the subsidiary registered in the Bahamas, to ensure whatever remained was not siphoned off or stolen by hackers.

On November 11, FTX filed for bankruptcy and control of the company was wrested from Bankman-Fried. A month later, he was arrested by Bahamian authorities, then extradited to the US to face trial.

FTX’s implosion “was a bombshell to the industry,” says Bethel, and cast a pall over the Bahamas and crypto in general. FTX customers, many of them regular people, lost billions of dollars in aggregate. Its lenders and equity holders lost many hundreds of millions more. The collapse caused markets to nose-dive and led to the failure of other crypto firms; a regulatory crackdown in the US; and, in a roundabout way, the fall of two crypto-friendly banks.

But any attempt to tally up the losses imposed by FTX, says Bethel, should also factor in the cost to the businesses whose prospects it damaged indirectly. “We had a good idea get caught up in a very bad storm,” he says. “We hear of all of the funds lost by [FTX] clients, which is heartbreaking. But billions of dollars isn’t the full amount because there’s value in a lot of good companies that is lost as well.” Crypto startups were affected worldwide, but in the Bahamas, doubly so.

The collapse was a “pretty deep cut,” says Tim Byun, head of government relations at OK Group, parent company to OKX, which received a license to operate in the Bahamas only days before FTX collapsed. “I think it set back the ecosystem significantly.” Byun says OKX still wants to expand in the Bahamas, and he likes the country’s DARE regime. But OKX isn’t looking to replace FTX as the face of the country’s crypto scene, either. “We don’t have the ambition to be the crown jewel,” says Byun. “We have no aspirations to be a rock star in the Bahamas.”

Reputational damage is intangible, hard to quantify. But the feeling among Bahamians working in the crypto sector is that the country has been unjustly punished for its association with FTX, and that its role in the company’s failure has been mischaracterized.

“A lot of people were unfairly blaming the Bahamas for what happened,” says Stefen Deleveaux, president of the Caribbean Blockchain Alliance, a nongovernmental organization promoting the adoption of crypto technologies in the region. “But we all know this was traditional fraud.”

A billboard for the Bahamas Brewery & Beverage Co. Sands Pink Radler beer in Nassau, Bahamas in December 2022.Photographer: Victor J. Blue/Bloomberg/Getty Images

Deleveaux believes there was a racist undertone to the coverage of the scandal in international media. Below the surface, he says, was the idea that a poor and predominantly Black nation had let a wolf into the sheep pen, inviting a bloodbath. It felt “almost personal,” says Deleveaux. “It’s been rough.”

There was also confusion—even, some in the Bahamas say, misreporting—about the behavior of the Bahamian regulator in the days after the FTX collapse. A tweet from the FTX Twitter account started a rumor that the SCB had instructed Bankman-Fried to reopen withdrawals for Bahamian customers only, which was picked up by crypto media. Elsewhere, it was reported the regulator had demanded FTX mint and then hand over millions of dollars in new tokens. In a 500-page affidavit published in December, the SCB refuted these claims.

It’s unsurprising, then, that the Bahamas are on the defensive. Initially, members of the crypto industry declined to comment on FTX to avoid speculating on an evolving situation, but not speaking about what happened “caught on,” says Jillian Bethel, founder of Crypto Isle and former CEO of OKX Bahamas, because of “sensitivity” to the depiction of the Bahamas in the foreign press. “I don’t think FTX is a dirty word,” she says, but “it became a thing.”

This October, as Bankman-Fried’s trial entered its second week, the Bahamian government opened its first crypto conference, D3 Bahamas. I had been flown in to participate in the event, and spent the week studying the impact of the FTX collapse. (Despite providing travel and accommodations for the conference, the Bahamian government had no editorial control over this article.) The conference was originally scheduled for late January, but it was postponed after FTX’s collapse. Held at the Atlantis resort on Paradise Island, north of Nassau, D3 was a statement of intent: The Bahamas still want to be a center of the crypto world.

In contrast to the conference FTX hosted the previous year, at which football star Tom Brady, supermodel Gisele Bunchen, and former political leaders Bill Clinton and Tony Blair were headline speakers, there was little glamor. The location was still ostentatious: At the resort, manta rays and other sea creatures swim laps around open-air aquariums; palm-lined beaches frame crystal waters; and the hotels are cartoonish in their scale and luxury, like a tropical Las Vegas. But the agenda was decidedly unsexy. Gone were the massage breaks, sunrise yoga, and talks on effective altruism, the intellectual movement espoused by Bankman-Fried—it was all about regulation.

On the eve of the event, Davis stood up at his table at fine-dining restaurant Nobu to deliver a toast. His message was simple: Forget about FTX. “The only thing the FTX debacle did was embolden crypto critics,” he said, before raising his glass. “The digital asset world is here to stay.” It was a rare acknowledgement of the elephant that paraded the halls of the conference.

In his keynote speech the following morning, Davis did not broach FTX. In a panel appearance, Christina Rolle, executive director at the SCB, described FTX as the “three cursed letters.” The various other panelists took refuge in euphemism. It wasn’t the FTX debacle; it was “the unprecedented challenges” of the previous year. The organizer, a firm called Finoverse, had planned to run a panel session on “lessons from FTX” but removed it from the agenda after consulting with the government, says Will Haskins, head of strategy and content, to avoid a “rehash” of already public comments.

The SCB is in the process of updating its crypto regulations with a series of new provisions, set to be written into law by the end of the year. At D3, the regulator cast the changes as a reflection of technological developments in the crypto world: “We knew when we were developing the legislation that there were things that we couldn’t touch, because we didn’t understand. We knew the legislation would have to be flexible enough to evolve as the industry required,” Rolle said in a panel appearance. But the SCB did not directly acknowledge that some new rules, like the mandatory segregation of client and corporate assets, appeared to refer back specifically to the mechanics of the alleged FTX fraud. There is no mention of FTX in the 83-page document outlining the updates.

The office of the prime minister did not respond to a request for an interview. Rolle pulled out of an interview on short notice, citing scheduling problems, but she had only agreed to speak on the condition that she wasn’t asked about FTX.

The strategy seems to be bearing fruit. In the past year, 12 digital asset businesses have registered under DARE—bringing the total to 17—including large firms like Bitfinex and Galaxy Digital. The footprint of these companies remains small, but Davis believes the favorable regulatory environment will encourage expansion. “Everybody wants to come to the Bahamas,” he said, in his dinner toast. “People are still rushing [here].”

The decision to double down on a pro-crypto policy has been received poorly by some Bahamians. “Nowadays, it looks like any time somebody wants to do anything bad, they come to the Bahamas,” says Don Armbrister, a retiree and lifetime resident of Nassau. Armbrister hadn’t heard of FTX until its fall, but he is now concerned the government’s stance could attract the “wrong kind of business” and increase the risk of the Bahamas getting snarled in another controversy. Online, the mood is similar. The comment section of a recent Facebook post publicizing a story on the expansion of OKX in the Bahamas is littered with criticism of the eagerness to embrace crypto. “Here we go again,” wrote multiple commenters. “Another FTX?” asked another.

Photographer: Victor J. Blue/Bloomberg/Getty Images

Other Bahamians remain suspicious of the technology. “Cryptocurrency is so new that many of us are only just learning about it,” says Rodney Moncur, a talk show host and former senator in the Bahamian parliament. “I’m opposed to cryptocurrency. I prefer cash.”

The leaders of crypto businesses with a presence on New Providence are hopeful regular Bahamians can be won over, in time. “Typical to most emerging markets is a fear of the unknown. Then there are accusations when the unknown turns into a black stain,” says Jillian Bethel. “But the skin that grows around an injury is tougher than what was there before.”

Meanwhile, with the next general election not due until 2026, Kong says the timing of the FTX collapse may play into the government’s hands. “Politically speaking, there’s enough time … for people to forgive the government for making the wrong decision in trusting FTX,” he says. It would have been easy, given the “egg on its face,” for Davis’ administration to take an anti-crypto stance, says Kong, but “you might even argue the government is even more pro-crypto than before.”

But as the Bahamas tries to distance itself from the FTX episode, a resentment toward its uncomfortable legacy remains, somehow more palpable for the policy of silence. The feeling among Bahamians is that Bankman-Fried “used us,” says Anastasia Charlow, another Nassau resident.

Depending on the outcome, Bankman-Fried’s trial may serve as a catharsis for some. Few regular people that spoke to WIRED said they are following the blow-by-blow developments, occupied instead with the more urgent matters of daily life. But members of the crypto scene will be watching closely for clues to his motivations and mindset—and the feats of mental gymnastics he must have performed to justify the alleged theft to himself.

“I just want to know why,” says Carlyle Bethel. The FTX founder lived a life of privilege in the Bahamas, brought into sharp relief by the deprivation on display in Nassau, one that “so many other people would hope and pray for,” he says. Yet he squandered it. “So, why?”