{"id":4569,"date":"2022-11-19T11:07:38","date_gmt":"2022-11-19T10:07:38","guid":{"rendered":"https:\/\/ancstockinvestments.com\/blog\/?p=4569"},"modified":"2022-11-19T11:07:40","modified_gmt":"2022-11-19T10:07:40","slug":"ftx-collapse-sends-shockwaves-through-africas-crypto-community","status":"publish","type":"post","link":"https:\/\/ancstockinvestments.com\/blog\/2022\/11\/19\/ftx-collapse-sends-shockwaves-through-africas-crypto-community\/","title":{"rendered":"FTX’s Collapse Sends Shockwaves Through Africa’s Crypto Community"},"content":{"rendered":"\n
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Sam Bankman-Fried has quickly become a persona non grata <\/em>everywhere, including in Africa. Once hailed as a crypto guru, the collapse<\/a> of his FTX exchange platform has sent shockwaves round the world, taking with it billions of investors\u2019 money. Even as he continues to thread tweets<\/a> with apologetic overtones<\/a>, Africans are taking stock of their own losses.<\/p>\n

Crypto enthusiasts who traded different coins on FTX-linked platforms have been unable to withdraw their investments while crypto startups are facing their own losses. <\/strong>Nigerian web3 startup Nestcoin<\/a> led by former Binance Labs director Yele Bademosi admitted<\/a> to being affected by FTX\u2019s downfall and has had to lay off employees<\/a>. \u201cLast week\u2019s events have had an impact on us, as we held our assets (cash and stablecoins) at FTX. As a company we have to adjust our plans, rethink our strategy\u2026Unfortunately, this means saying goodbye to some of our very talented Nesters,\u201d Bademosi said<\/a>.<\/p>\n

Many crypto traders and experts who in the past spoke openly and enthusiastically to Quartz about the highly unregulated industry have remained silent when asked about the current crypto uncertainty, signaling the degree to which the crumbling of one of the world\u2019s biggest crypto exchanges hit them.<\/p>\n

FTX crypto losses are huge<\/h2>\n

Lucky Uwakwe, one of the pioneers of Africa\u2019s blockchain revolution and CEO of Lagos-based tech firm SaBi Groups<\/a>, tells Quartz the crypto losses from Bankman-Fried\u2019s fraudulent schemes have been enormous. \u201cMany crypto investors are broken-hearted and angry. Some just lost their entire fortunes. As the Naira keeps fluctuating<\/a>, it is a double loss for Nigerians withdrawing their money from other crypto platforms. You get lower conversions against the dollar,\u201d Uwakwe says.<\/p>\n

Six platforms, Uwakwe says, have been affected in Nigeria and more than 15 across the rest of the continent. Kenyans are also counting millions in losses<\/a>. Other countries where the effects of FTX\u2019s downfall are causing panic crypto withdrawals are South Africa, Egypt, Uganda, Tanzania, and Senegal.<\/p>\n

Why Africa needs urgent regulation<\/h2>\n

And while some users in the Bahamas and the US were able to withdraw their funds before the full crisis hit, African traders may never access their money. \u201cIt is time Africa enacts laws that hold foreign companies accountable for their actions. If the African Union delays to push for these laws, then regional blocs such as the Economic Community of West African States (ECOWAS), East African Community (EAC), and Southern African Development Community (SADC) should lead the way in protecting Africans against future economic shocks from foregign players,\u201d Uwakwe tells Quartz.<\/p>\n

Many African central banks\u2014Nigeria, Ghana, Kenya, South Africa, Tanzania, Uganda<\/a>, Zambia, and Namibia\u2014<\/em>have been warning against the use and trade of crypto, but their citizens kept trusting the platforms in the hope of high returns. Only Ethiopia<\/a> seems to be seriously regulating the space.<\/p>\n

However, Nairobi-based author of Understanding the Blockchain <\/em>and member of the Blockchain Association of Kenya Benjamin Arunda tells Quartz while FTX\u2019s collapse has damaged the reputation of centralized exchanges, it may not affect crypto enthusiasm in Africa significantly.<\/p>\n

\u201cThe crypto industry has become dynamic with multiple aspects such as NFTs and the metaverse appealing to young crypto audiences. FTX\u2019s collapse will make them cautious on which exchange they trade in. But exchanges will have to set aside Proof of Reserves to cushion customers. Government regulators will have to speed up the development of regulatory frameworks to protect consumers,\u201d he says. Several crypto platforms have been working hard to ensure they don\u2019t end up like FTX<\/a>.<\/p>\n

The world\u2019s biggest exchange, Binance,\u00a0backed out<\/a> of its Nov. 8 plans to acquire FTX<\/a> and save it from financial distress citing reports of \u201cmishandled customer funds and alleged US agency investigations\u201d on Nov. 9. It collapsed two days later.<\/p>\n

But its CEO Changpeng Zhao is not celebrating his competitors woes. He offers some advice.<\/p>\n