• Ex-Cabinet minister declines comment on Ray claim

• Minnis: FTX approval request never came before me

• SBF loses bid to dismiss Bahamas ‘consent’ charges

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FTX’s Bahamas attorney yesterday declined to comment on allegations that a “former Bahamian government official” was offered a $1m “bonus” if they could expedite obtaining the necessary licences to operate from this nation.

Allyson Maynard-Gibson KC, a former attorney general and ex-minister of financial services and investments, wrote in response to Tribune Business inquiries: “Our firm does not comment on any client nor any matter connected with any client.”

The firm she referred to is Clement T. Maynard & Company.

This newspaper contacted Mrs Maynard-Gibson, who currently chairs the University of The Bahamas (UoB) Board of Trustees, after John Ray, head of the 134 FTX entities currently in Chapter 11 bankruptcy protection in the US, asserted that the “bonus” was offered to an unidentified attorney and “former Bahamian government official” if they were able to obtain the necessary Bahamian permits and licences for FTX within ten weeks.

Alleging that all required approvals were delivered “less than six weeks later”, well within the target timeframe, Mr Ray said in a report filed with the Delaware Bankruptcy Court: “In moving to The Bahamas, where they incorporated FTX Digital Markets in July 2021, the FTX senior executives sought to minimise any substantive change to or scrutiny of their business.

“Thus, for example, on behalf of the FTX group, in July 2021, ‘attorney one’ offered a former Bahamian government official, acting as an attorney, a $1m ‘bonus’ to procure a necessary business license for FTX Digital Markets within ten weeks. The attorney obtained the licence less than six weeks later.”

Tribune Business asked Mrs Maynard-Gibson in writing whether, in her capacity as FTX’s Bahamian counsel, she knew the identity of the attorney and “former Bahamian government official” that Mr Ray was referring to or, indeed, if this was herself since the description appears to be a close fit.

The former Cabinet minister was also asked if she knew what Mr Ray meant by the term “bonus”; if his assertions about its nature and value were correct; and if she was aware whether it was actually offered to someone. Tribune Business also inquired about the six and ten-week timelines referred to by the FTX US chief, but Mrs Maynard-Gibson did not respond to any of these queries.

Mr Ray made no assertions of wrongdoing against Mrs Maynard-Gibson or anyone else, and it appears likely that his reference to a “business licence” really means the licences and permits granted by the Securities Commission of The Bahamas to enable FTX to operate in this nation. Without these, it would have been unable to obtain a Business Licence or any other form of permit.

Tribune Business research, using prior Supreme Court reports by FTX Digital Markets’ joint provisional liquidators, shows that the crypto exchange’s Bahamian subsidiary was incorporated on July 22, 2021, and licensed and registered to operate in The Bahamas under the Digital Assets and Registered Exchanges (DARE) Act on September 10 that year - which would have occurred under the Minnis administration just six days before the general election.

Dr Hubert Minnis, the former prime minister, yesterday reiterated that he could not recall seeing or dealing with any of FTX’s permit applications during his time in office. “They never reached us,” he said. “They never came before any committee I chaired or sat on.”

Meanwhile, embattled FTX founder, Sam Bankman-Fried, yesterday lost his bid to persuade the southern New York federal court to dismiss multiple fraud, corruption and bribery-related charges against him on the grounds that they violated the US extradition treaty with The Bahamas.

Mr Bankman-Fried and his legal advisers had sought to ensure charges of “conspiracy to commit bank fraud”; “conspiracy to violate the Foreign Corrupt Practices Act’; “conspiracy to operate an unlicensed money transmission business”; commodities fraud; securities fraud; and US campaign finance law violations were all dismissed on the basis that they were not included in the offences for which he was extradited from The Bahamas.

They are arguing that these charges, brought against Mr Bankman-Fried subsequent to his departure from this nation, run afoul of The Bahamas-US extradition treaty, and specifically its Article 14. Known as the “rule of specialty”, this stipulates that someone being extradited from The Bahamas “may only be detained, tried or punished” in the US “for the offence for which extradition was granted”, while setting out other criteria.

Judge Lewis Kaplan, in his 41-page ruling yesterday, said the “rule of specialty” is designed to “restrict a nation that obtains a defendant by extradition from a requested state to trying the defendant only on the charges on which extradition was sought. The defendant contends that dismissal of those counts is appropriate because they were not bases upon which he was extradited from The Bahamas”.

However, Judge Kaplan ruled that the subject of an extradition request - such as Mr Bankman-Fried - “lacks standing to seek relief for non-compliance with an extradition treaty” unless its language grants such rights and benefits. He found that the US extradition treaty with The Bahamas does not provide for this, and therefore the FTX founder has no standing to use the “rule of specialty” as a tool to dismiss close to half the charges against him.

“The Extradition Treaty here at issue does not provide that it may be enforced by an individual,” Judge Kaplan ruled. “Nor is there any language indicating that The Bahamas and the US intended it to be so enforceable. Accordingly, under the second circuit’s binding precedent, the rule of specialty may be invoked here only by The Bahamas. The defendant lacks standing to do so.”

The verdict effectively means that Mr Bankman-Fried’s hopes of avoiding the multiple extra charges added post-extradition lie with the Bahamian judicial review proceedings he has initiated, demanding that he be heard - and allowed to make representations - as to why the Davis administration should not give the US permission to bring those claims against him.

The US is presently seeking The Bahamas’ consent to bring the extra charges against Mr Bankman-Fried, known as a “waiver of specialty”, but the Supreme Court has issued an injunction temporarily blocking the Government from giving any such permission until the Judicial Review’s outcome is determined.

“In all the circumstances, the defendant lacks standing to invoke the rule of specialty and his motion is denied without prejudice to a renewed motion should The Bahamas object to any of the charges brought against him,” Judge Kaplan ruled. “The defendant’s request for discovery pertaining to his extradition likewise is denied. The parties are directed to keep the court informed regarding the status of the specialty waiver and request for clarification.”

The US government and its prosecutors have already agreed to “sever” the post-extradition charges from those that secured Mr Bankman-Fried’s removal from The Bahamas in late December 2022 to enable his October 2023 trial to proceed as scheduled. Judge Kaplan’s verdict paves the way for the FTX founder to be tried on the other ones in early 2024 subject to obtaining The Bahamas’ permission.