Cryptocurrency firm Arbitrade were urged by the Bermuda Government to keep its promise to plough $1 million into fintech development, despite not having a licence to run a digital asset business on the island.

Correspondence obtained by The Royal Gazette showed apparent confusion among leading Cabinet Office figures over whether or not a memorandum of understanding was signed with the cryptocurrency exchange and coin company.

And one feared a planned incubator set-up for the new sector would “fall off the radar” if there was no written commitment to donate the money.

Arbitrade Ltd is incorporated in Bermuda, along with four subsidiaries, and revealed bold plans for operations here last summer, including a seven-figure contribution towards a fintech development hub later named Project 44 and earmarked for Church Street, Hamilton.

It emerged earlier this year that the project was shelved and the Government said in February it wanted to guarantee “fiscal prudence” and to make sure that the proposed centre, expected to include sleeping pods and a gaming area, were not already available in the private sector.

Copies of communication received by The Royal Gazette last week in response to a public access to information request showed that officials asked Arbitrade in January to follow through with its $1 million announcement. A government spokeswoman confirmed last Saturday no payment had been made.

Wayne Smith, the head of the fintech business unit overseen by the Cabinet Office, wrote to Wayne Caines, the Minister of National Security, who had responsibility for fintech at the time, on December 12, 2018.

He asked: “Do we have anything in writing from Arbitrade? Project 44 is about to fall off the radar and the list of initiatives if we cannot find anything. I have nothing.”

He said “Cherie”, understood to be Cabinet Office permanent secretary Cherie-Lynn Whitter, had a sample cheque that was attached to the e-mail.

Mr Smith added: “That’s not worth anything.”

A photograph included in the documents provided to The Royal Gazette showed a mock cheque dated June 29, 2018 that suggested $1 million would be paid to The Bermuda Fintech Innovation Hub.

It had no payee name and made no reference to Arbitrade, any other company, or individuals.

Mr Caines replied: “Yes, we have to ask them directly if they have completed the KYC [know your customer] process and when they will give the money.”

He directed Mr Smith to Delroy Duncan, the director and head of litigation at Trott & Duncan which acts for Arbitrade, but no correspondence between the pair was included in the documents.

Jane Walker, a senior corporate attorney at Trott & Duncan, declined to comment on the exchange when she was approached last Friday.

Mr Smith wrote in an e-mail to James Goldberg, an Arbitrade founder, on January 9: “Further to our conversation last evening, we wish to write to you to formally request that you deposit the one million dollars that Arbitrade promised to donate to Bermuda into the Bermuda Fintech Development Fund.”

Mr Goldberg forwarded the e-mail to Len Schutzman, Arbitrade’s chairman and chief executive, Troy Hogg, another founder of the company, and Max Barber, who is understood to be a manager at Sion Trading FZE, a business partner of Arbitrade.

Mr Smith also asked for an address where he could send a letter.

He added: “I could also bring a hard copy with me next week when it is hoped we can all meet in Miami.”

Mr Schutzman responded two days later with his Florida address and agreed a meeting could be held the next week.

A reply from Mr Smith the same afternoon said he would e-mail the letter that day and deliver a print copy in person.

He proposed to meet the following Tuesday at the Kimpton Epic Hotel in Miami before lunch.

Mr Smith was also in an e-mail exchange with Ms Whitter over the same period — January 9 to 11 — when he sent her a draft of the letter to review.

She answered: “Please amend the language. We cannot write to a company and ask them to ‘make good on your promise’.

“Do you have a copy of the MOU that speaks to the commitment? Your letter should refer to the document that sets out the commitment and direct them accordingly ... please send a copy of the MOU. Wherein the commitment is referenced. Needed urgently.”

Mr Smith replied: “I’m looking but don’t see an MOU anywhere.

“I will have to check with others but I don’t see an MOU.

“All we have is the check picture you sent and the media coverage.”

A letter from Mr Smith addressed to Mr Schutzman, said: “Further to our communication over the past few days, I am writing as a follow-up to formally request that in accordance with the public announcement of July 2018, Arbitrade proceeds with its commitment of a one-million dollar contribution to Bermuda Fintech Development Fund.”

He added: “As also discussed, I plan to be in Miami next week and would like to meet with the Arbitrade team to obtain an update on your progress.”

Nothing in the documents provided to The Royal Gazette confirmed receipt of the letter or if the Miami meeting took place.

A government spokeswoman confirmed that Mr Smith had met Arbitrade representatives “to obtain an update on the status of the Arbitrade Bermuda project”.

She said that no money had been paid into the fintech development fund and added: “An announcement will be made when it has.”

The Royal Gazette asked the Government on the evening of January 8 about a procurement notice issued last September that sought architectural and interior design services to transform 44 West Church Street “into Project 44, a premier fintech hub”.

The e-mail was sent about the same time that Mr Smith spoke to Mr Goldberg on the phone about the $1 million donation.

A spokesman said a $74,000 contract was awarded to Clarico Ltd for work on the West Church Street project but the project was “on hold” in a response to The Royal Gazette about 16 days later.

Jamahl Simmons, the Minister without Portfolio, later said the Government decided to reallocate funds from the proposed building project to provide fintech training for Bermudians.

Mr Schutzman, Mr Hogg, Mr Goldberg and Mr Barber did not respond to a request for comment.

• To view the Pati request and response, click on the PDF links under “Related Media”