A Crash with a Splash
Notorious for its outlaw status, The Bahamas have sadly not had much success in shaking off their reputation as a staging area for an impressive variety of piracies and acts of lawlessness.
By Baron Axel von Schubert
From the days of Blackbeard and Anne Bonny, the most famous and seductive female pirate to sail during the Golden Age past our sun kissed Bahamian shores, acts of piracy are still ubiquitous here and a daily occurrence; mostly hardly newsworthy anymore. However, they have evolved and morphed over 200 years into fiendishly sophisticated white collar crimes; from money laundering, criminal finance, culminating in the recent spectacular blow up of FTX, the world’s second largest crypto exchange.
One thing is certain: there is never a boring day in paradise and the past month has been no exception: one headline chasing another, speculating about the dark deeds of a 30 year old snotty math wizard, MIT physics graduate, who has mysteriously arrived with a cabal of fraternity buddies from Hong Kong in The Bahamas less than one year ago, boasting a mind-boggling $ 36 Billion fortune.
Sam Bankman-Fried, dubbed ‘SBF’, by his star-struck admirers and lemming-like followers (who have since tasted the fall off the proverbial cliff), managed to master-mind a financial stunt that makes Bernie Madoff look like Jesus Christ.
Having arrived not by Galleon, but Gulfstream, not hiding their loot in mosquito infested coastal caves like their forebearers, but armed with encrypted laptops, they created billions out of smoke and mirrors, while living it up in a fancy air conditioned 1.200 square meter penthouse on the beach.
Splurging hundreds of millions of their ill-gotten gains in a gargantuan spree of lavish, hedonistic excess, SBF and his dozen ‘Wunderkinder’ made quite an impression not only on the local business community, but quickly caught the attention of the government. The Prime Minister and his PLP party members, smitten with this smooth talking gifted whiz kid, were starving for a new, revolutionary financial product.
Something so visionary and unique, which would propel their country onto the world stage of high finance and score valuable political ‘brownie points’ with their constituents who were growing increasingly frustrated and weary of their empty political promises and declining financial services industry.
Buddying up to the second largest global crypto player was to be a sure-fire winner for the country. Publicity galore and supermodel Giselle Bundchen as brand ambassador in tow, stroked the government’s ego to the point of no return.
The Bahamas needed to make a splash, and what a splash it was!
A ferocious feeding frenzy for local property agents and lawyers ensued, all too eager to oblige to every whim of their newly arrived Messiah, whose $ 40 Million penthouse apartment quickly turned into a filthy dormitory, littered with empty pizza boxes, dirty socks and $ 5.000 sneakers thrown on the polished marble floors. A further 5 ocean front luxury apartments were bought for another cool $ 30 Million+ at $ 6 Million a pop, nestled in the most exclusive and outrageously expensive enclave of The Bahamas, Albany.
Albany, the brainchild of Joe Lewis, an English Billionaire, who famously lost a cool $1 B in a financial bet on the Bear Stearns investment bank during the 2008 crash, and whose fabled art work on his monstrous yacht rivals that of the El Prado Museum in Madrid, has evolved into an artificial, vacuous and soulless compound on the once mosquito infested southern side of Nassau. Three hideous smoke stacks of the local electricity plant, a testimony to the crumbling Bahamian infrastructure, loom only yards away from the flashy Albany lavishness.
Arriving at the Albany gates,five ominous, prison-like guard tower estate homes, enforce and match the challenging visual impact of this growing Orwellian housing concoction, tenderly referred to by the less aesthetically challenged as ‘Albania’, playground for the world’s super rich and gaudiest sports celebrities money can buy.
The opulence and decadence of this luxury 5star retreat boasts Tiger Woods, one of the more famous home owners and regulars along with dozens of A-list celebrities, as members.
It was exactly the venue that FTX needed to spread its siren words of crypto wisdom.
The Bahamas were an attractive and protective safe-haven for FTX’s aggressive and questionable schemes, their incessant marketing assaults on the unsuspecting investor world, safely distanced from heavily regulated and scrutinizing onshore jurisdictions, which would quickly contribute to its demise.
‘Axel, we need to talk to you’, was my first telephone call received from the London Bloomberg office on a misty Tuesday morning in early November. Sipping my Cuban coffee overlooking the azure Caribbean waters at an ungodly hour of 8 am in the morning, I had a sneaking suspicion of the nature of the call and was really not in the mood to discuss anything else but my upcoming tee time at the Lyford Cay golf course today. ‘Make it quick, I’m only half awake, or call me later.’ I barked back.
Within a few hours, I was lunching with a carefully chosen press team from Bloomberg New York, who had been sent to Nassau for an in-depth coverage of the unfolding FTX debacle.
Over a bottle of Krug Champagne and a 2 hour TV interview the following day at Nassau’s posh 5star Rosewood Hotel, the young journalists were fascinated to learn how such a small island nation could have become center stage for one of the world’s largest and most spectacular financial collapses in history.
Whilst the Bahamas, to their defense, have carefully and diligently enacted a legal framework to regulate crypto business, the DARE Act in 2020, it was with far less care and diligence they would naively embrace with fervor some unknown kid, with no history or track record to speak of, bragging about some $ 36 Billion fortune created out of thin air in less than 3 years.
The mess left behind, and above all, the lasting damage to the image of our wonderful country, will linger on much longer than the flash fame created by the millions of Dollars hastily dumped on our local soil.
Monopoly money created by a motley crew of pimple faced teenagers, led by an ‘Emperor without clothes’, sipping tofu lattes on their bean bags at 4 am in the morning, blinded by the flashing of their fake billions on their computer screens.
But time had run out. The Americans had just announced a sealed criminal indictment against SBM, two days before he was to testify at a Senate hearing in Washington on what had caused the FTX demise.
600 miles away however, it was ‘Martini Monday’ for the ‘Rich and Famous’ in Albany, the sun gently disappearing in the azure Caribbean waters, when the Royal Bahamian Police Force launched their stealth operation on SBF. The final knock on his $ 40 Million penthouse was not the daily Sushi caterer, but a sinister squad team whisking him away to the infamous Fox Hill prison, where he is now awaiting extradition to the US.
What a splash!
Baron Axel von Schubert is an International tax advisor and former speaker at the International Tax Planning Association, London, UK. He shares his time between his homes in Nassau, Bahamas and Marbella. Advisor to celebrities, billionaires and tech tycoons, he is fluent in five languages, served as Consul to the Bahamas and is a keen vintage Ferrari collector and racer. You can reach him on: BahamasBaron@gmail.com