Breaking: Bahamas Attorney General Previously Employed by Bank of FTX

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by Space Worm
Monday, Nov 28, 2022 - 16:00


Screen-grab from attorney general’s national address.

Authored by the Space Worm
The Bahamas Attorney General Ryan Pinder, who gave an official address Sunday evening on the FTX crisis, formerly held the title “Head of Wealth Management” at e-banking platform Deltec, which was listed as a bank of FTX in the company’s recent bankruptcy filings.

According to Pinder’s LinkedIn profile, he worked at Deltec throughout 2015 while simultaneously holding a position in Bahamian parliament. The e-bank is included in the FTX filings along with other big names such as JP Morgan and Wells Fargo.

Deltec, like FTX, is based in the Bahamas and both are registered under the country’s Digital Assets and Registered Exchanges Act (DARE), a law intended to regulate the “issuance, sale, and trade of digital assets.” In his Sunday speech, Attorney General Pinder praised the act for allowing Bahamian regulators to act “quickly and decisively” in freezing FTX assets.

On November 10, the Securities Commission of the Bahamas (SCB) released a statement announcing that FTX assets had been frozen and the company’s license under the DARE program revoked. The proceedings for forced liquidation have since been transferred to a bankruptcy court in Delaware.

Pinder’s former employer, Deltec, is the primary bank of stablecoin issuer Tether, a company that has paid multi-million dollar settlements to both the New York Attorney General’s Office and the Commodities and Futures Trading Commission for falsely claiming their tokens were backed one-to-one by U.S. dollars. According to a research report by crypto outlet Protos, FTX sister company Alameda Research was the largest user of Tether in 2021.

The e-bank’s ties to the Sam Bankman-Fried empire do not end there.

Deltec Chairman Jean Chapolin – also the creator of the hit cartoon series Inspector Gadget – was in the news last week for his investment group’s acquisition of Farmington State Bank, previously a small agricultural lender with three employees based in Farmington, WA now rebranded as Moonstone Bank with a focus on digital assets. FTX invested $11.5 million in Moonstone earlier this year.

Chapolin’s investment group purchased the bank in 2020. FTX/Alameda acquired a 10% stake earlier this year. Credit: Dan Pelle/The Spokesman-Review

“It appears FTX wanted to move into the digital banking space, which makes sense. But why did they need to partner with such an obscure bank [Moonstone] to make that happen?” wrote Genevieve Roch-Decter, CEO of Grit Capital, in a Tweet on Nov 25.

According to FDIC data reported by the New York Times, for a decade the rural Washington bank averaged $10 million in customer deposits. In the third quarter of this year, deposits shot up to $84 million with the bulk of the funds originating from just four accounts.

Moonstone is also listed as a bank of FTX in the crypto exchange’s bankruptcy filings.

Moonstone’s Chief Digital Officer, Janvier Chapolin – son of Jean – explained in an interview with Protos that the investment by Alameda was seed funding meant to assist their expansion into tech and digital assets. The junior Chapolin also mentioned that Moonstone currently employs 25 people but suggested the platform is only open to friends and family.

In July of 2021, the bank was accepted as a member of the Federal Reserve System. This allows the formerly local bank to engage in activities “to the same extent as national banks.”

The contact form on Moonstone’s website does not appear to function.

Pinder concluded his national address with reassurances regarding the future of the digital asset industry and its place within the Bahamas, “We believe that the turbulence currently being experienced by the digital asset sector will pass and that there is still much potential for growth and opportunity ahead.”

“I am fully confident that, as matters progress, and the activities of the FTX group are either restructured or wound down, the Bahamas will emerge, held in even higher esteem.”

In a rare instance of social media activity from the former FTX founder, Bankman-Fried retweeted the link to the attorney general’s speech. Some in the crypto community thought this to be a strange move and speculated that it may indicate Bahamian regulators are working behind the scenes with the disgraced founder.

“If you needed any more proof that the Bahamian government is in the pocket of SBF after his donations, the only thing he is [sic] retweeted all week is their telecast,” tweeted Adam Cochrane, partner at the crypto investment fund Cinneamhain Ventures.

Pinder, Deltec, and Moonstone did not respond to requests for comment.

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