Letters

Open letter to the people of The Bahamas on FTX

Dear people of The Bahamas,

It was about time that The Bahamas attorney general, Ryan Pinder, came out formally last week in his 23-minute prepared speech to give context on the FTX situation and the investigation.

And it was clear that the message was directed to the global crypto community and regulators around the world looking for answers as to how Bahamas was approaching the investigation.

However, if you’re not “crypto crazy” or a bankruptcy lawyer, it’s unlikely that you hung around the full 23 minutes or could understand everything Pinder was talking about. But I was happy that he did spend some time reiterating The Bahamas’ commitment to crypto as well as the promise of this new blockchain technology.

But what about the message to the Bahamian locals? All the people in Nassau who were feeling so optimistic over the last year about what this new innovation may bring to their own lives? All those people who rolled out the red carpet for these young goofy crypto nuts arriving in dozens on their island?

Since I feel that audience deserves some context, here goes…

As I think back to my first impression when I arrived in Nassau a year ago, it was the number of locals who trustingly handed me their cell phones to help them set-up a crypto account.

I’ve been working in the crypto industry for several years now, and that is not the norm; either you have crypto crazies like me who are all in, or the rest of the population who doesn’t understand crypto typically passes it off as a scam or Ponzi and aren’t open to learning.

But what I found in The Bahamas was a community full of welcoming, optimistic people who were hungry to learn more. And here was an initiative driven by The Bahamas government that wasn’t only going to benefit the elite, but was open to any Bahamian with a cell phone and $10 to their name. I became convinced this was the right island to become the new welcoming home of crypto.

Fast forward to November 11th when FTX declared bankruptcy, and it seems that the future of crypto is now in question for many locals on the island.

But before we drill down into that question, let’s take a step back first and talk about what this crypto industry is all about; better yet, let’s start with what it isn’t. Crypto is not just about buying a new token or NFT for $1, and having it go to $100 overnight, and then selling it and living in a fancy penthouse in Albany.

That was by no means the original vision of Satoshi Nakamoto when he wrote the Bitcoin whitepaper in 2008. The spirit of Satoshi’s innovation then, and what the good actors in crypto have been fighting for, is about decentralization and empowerment of a peer-to-peer network, not subject to expensive intermediaries.

Satoshi’s vision in 2008 was that the Federal reserve was getting it wrong in their excessive printing of fiat money (and if we fast forward to today’s inflationary world, it appears he was correct).

So Satoshi created a distributed network that didn’t depend on centralized institutions such as governments or banks. That solution had a “store of value” coin as part of the incentive to contribute computing power to the network called “Bitcoin”.

And it was hard coded that only 21 million of these Bitcoins could ever be minted. That limit inherently created scarcity of this cryptocurrency, while central banks were printing fiat money with no limit. And that laid the foundation for a whole new wave of innovators to come in and start building on top of Satoshi’s vision.

And the troves of smart innovators that came after Satoshi, such as the creators of the Ethereum blockchain and related smart contracts, took it to a new level.

All of a sudden there was a completely decentralized and transparent network that was open for anybody with a computer (or even cell phone) to participate in and build upon.

For anybody frustrated by the time and fees it takes to send wires between the USA and The Bahamas, or are frustrated by waiting on line at the local bank, or had an idea to start a micro-business but the barriers to entry were too high, the blockchain and these smart contracts now opened up the promise of being able to do those things from your cell phone or computer.

From my time living on the island, I’ve observed wealthy people in The Bahamas sending their children to the USA to get a college degree, after which time they travel to Silicon Valley or NYC to beg for a job from some old White guy.

Well, the open-sourced blockchain would enable the less privileged Bahamas kids who couldn’t afford that path, to learn coding and build a solution on top of Ethereum, mint a token (within the legal regulatory framework of The Bahamas), and create a useful peer-to-app and have it go viral across the world.

And there would be no need to leave The Bahamas or ask permission from some busy dude in San Francisco, (and hopefully the app actually disintermediates that guy’s centralized app!). That is the promise of the Blockchain and this decentralized foundation that is being built within crypto.

And that’s really what this crypto movement is about. It’s about creating an open operating system that will allow your children opportunities that you never had in this centralized world gated by the few elite. That is both as users, who are transacting with less friction, as well as entrepreneurs who are creating new valuable apps and solutions on top of the blockchain.

And Sam Bankman-Fried (SBF) through his early investments became a sort of cult-of-personality for the crypto movement. He was young and visionary and made a lot of the right investments that paid off and allowed him to build an empire. And one of his stated goals was to make billions of dollars for himself, and then give it away via this cult-like “effective altruism” which never seemed to filter down and help anybody.

But most of us in the industry believed the better approach would have been more of a direct focus on creating education and support of the next generation who were eager to learn to code on the Blockchain, so they could create their own useful apps and acquire their own wealth. That is true progress, and The Bahamas still seems like a great place to invest in that initiative given the enthusiasm here.

So back to the question of where The Bahamas goes from here. Well, just because your first relationship ended bad when you were a teenager, doesn’t mean you give up on love and partnership for the rest of your life.

You learn, you evaluate the things you could have done better, and you’re stronger for the next one. And I was pleased to see that message being relayed by Pinder in his speech.

And let me also state that it does not appear that The Bahamas’ regulators are at fault here. Some of the smartest venture capitalists and professionals in the world were fooled by this guy and were throwing billions of dollars at him.

And these token valuations and volatility were all so new and crazy; it’s still going to take years for lawyers and accountants to sort out “what was what”. The fact is, it doesn’t matter how solid regulation is if an individual decides to commit fraud and take extreme actions to hide it.

And The Bahamas moved in with decisive action that impressed the world. Even though it’s crypto, it seems The Bahamas and the local legal firms have more than enough experience with alleged financial fraudsters, so I’m confident the rest of the world will be further impressed by The Bahamas’ regulatory actions going forward.

And whatever we learn about SBF’s actions, the end result is he did bring positive attention to The Bahamas and built some foundation.

Yes, there are lessons to be learned, and it never hurts to take a cautious step back, but crypto and the new decentralized world is here to stay. And The Bahamas is still fortunate to have a headstart on this future, even more than the USA which has been asleep at the wheel regarding a crypto framework.

So now is the time for The Bahamas to separate out the actions of one person and continue its commitment to welcoming the good actors in this industry.

Living here for a year, it is clear to me that The Bahamas is full of people of strong character who never quit. Now’s the opportunity to demonstrate that to the rest of the world.


  — Hunter LaCorcia

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