Will Coinbase Be The Next FTX Scandal?

Coinbase (COIN) has taken a major step in its international expansion efforts, obtaining a Class F license from the Bermuda Monetary Authority (BMA).

The U.S. based crypto exchange expressed excitement at the announcement, but currently does not have any exhaustive plans outlined in terms of the services it will offer with the new license.

In addition to the progression in the Bermudan market, Coinbase is taking steps to advance in the Canadian market, having hired Lucas Matheson as country director. The company has also put its weight behind a Pre-Registration Undertaking (PRU), a crucial milestone in the journey to becoming a registered exchange in Canada. With its Class F license, Coinbase joins a list of a few select companies that are part of an exclusive group of digital asset service providers.

The course of action taken by the U.S. exchange, in the wake of discussions about regulation in the States, highlights the necessity for growth initiatives like this if the company is to effectively compete in an increasingly competitive crypto field.

Navigating Offshore Jurisdictions

The challenges faced by FTX in the Bahamas serve as a reminder to Coinbase of the risks involved in operating in offshore jurisdictions.

FTX’s regulatory missteps have led to legal troubles, including its bankruptcy filing and attempts by Bahamian regulators to recall its assets. Coinbase’s recent acquisition of a license to operate in Bermuda should proceed with caution and a focus on regulatory compliance to avoid similar challenges.

FTX‘s property buying spree in the Bahamas was revealed by Bahamian regulators, with Sam Bankman-Fried and Ryan Salame splurging $256.3 million in total to purchase 35 properties on New Providence island, including two of the largest apartments at the private Albany development for $30 million and $21.3 million each.

Other purchases include FTX’s headquarters which already saw $25 million sunk into the land, though the project’s construction is halted due to the company filing for bankruptcy.

Now, Bahamian regulators are attempting to recall the assets from FTX’s bankruptcy process as they plead with a U.S. judge to dismiss FTX’s property subsidiary‘s Chapter 11 application. The reason being that all the property is based in the Bahamas, making any foreign insolvency proceedings administratively ineffective and illegal.

Sam Bankman-Fried, the founder of crypto trading platform FTX, has had four new criminal charges as of February 23rd 2023 added to his existing eight-count indictment, being accused of participating in a $1billion fraud.

The indictment claims that Bankman-Fried used customer accounts on the trading platform to prop up operations and generate funds for himself, Alameda Research, and venture investments. Bankman-Fried has pleaded not guilty to all charges and was released on a $250 million bond and is currently residing at his parents home under home confinement.

The US attorney for the Southern District of New York believe that justice will be done in due time.

Bankman-Fried’s associates, including Caroline Ellison, have pleaded guilty to charges and the CEO could face up to 155 years in prison if found guilty on all counts.

The indictment includes evidence of Bankman-Fried suspending customer withdrawals, allowing multimillion dollar withdrawals in the Bahamas and encouraging communication via encrypted messages.

Coin-clusion

In conclusion, Coinbase’s recent international expansion efforts, including obtaining a Class F license from the Bermuda Monetary Authority and advancing in the Canadian market, demonstrate its commitment to staying competitive in the ever-growing crypto field.

Coinbase’s efforts to expand and evolve in the global market remain positive, and it will be interesting to see how the company continues to navigate this dynamic landscape.