FTX collapse shatters crypto dreams in Africa
Almost a month after, the crypto community is still filled with outrage over arguably the most unfortunate event in the recent history of the financial industry - the FTX debacle.
However, not much is being said about the devastating effects of the crash in Africa. In countries like Nigeria, Ghana and South Africa, where inflation and currency devaluation is at an all-time high, young people see crypto as a shield against the harsh situation of their crumbling economies.
But unfortunately, the FTX exchange, which had proven until its demise to be one of those 'shields' with its juicy 8% APY on stablecoins, crumbled faster. And it went down with billions of investors' funds, a significant chunk of which are Africa's.
A Reuters report tells the stories of these African victims. A particular Osarieme Aghedo, who works in the marketing department of a Nigerian startup, reportedly had $8,720 of his savings in FTX because he thought it was risk-free. He hoped to use the money to acquire a jolly ride in 2023, but it wasn’t to be.
"It hurts more than I can express," Osarieme Aghedo laments. You can read more about the plight here.
Where to go from here…
As the FTX contagion spreads, one of the biggest casualties is the lending arm of Genesis Capital, owned by Digital Currency Group (DCG). DCG also owns Luno exchange, one of Africa's biggest crypto exchanges. And as you might have guessed, Luno had an Earn program that lent money to Genesis to generate yields for its users. It offered yields on USDC and BTC.
About a day after Genesis Lending paused redemptions, Luno reassured its users that they could still get access to their funds in their savings wallet. And by December 1st, it decided to totally shut down its Savings wallets, saying that “there is no longer a sufficiently significant or stable market to offer Savings Wallet services in a way that meets our rigorous standards”.
It’s still unclear whether Genesis or DCG will file for bankruptcy, but Luno is somewhere in the mix, and no one knows for sure what will happen in the coming weeks.
Pretty sure we haven’t seen the end of the cleansing going on in the market right now, and more crypto companies in Africa could still be affected.
Stay tuned as this unravels in the coming weeks.
What else is going on in Africa this week?
IMF calls for tighter crypto regulation in Africa as the industry unfolds
The International Monetary Fund calls for increased regulation of Africa's crypto markets since it's one of the fastest-growing markets in the world.
Another crypto company, Lazerpay, lays off staff
Lazerpay, a Nigerian crypto payment gateway startup, has laid off a significant number of its staff, according to its founder and CEO, Njoku Emmanuel.
South Africa Adds Crypto Businesses to List of Accountable Institutions
South African lawmakers have added crypto businesses to the country's list of accountable institutions that must identify and keep records for new and existing clients to ensure transparency.
BIS report finds uneven progress, differing motivations in African CBDC adoption
Nineteen African central banks responded to the survey that served as a basis for the report, and all of them stated that they were actively interested in CBDC.
What's going on abroad?
Crypto exchange Kraken lays off 1,100 employees.
Its CEO said that Kraken, the world's third-largest crypto exchange by volume, is laying off about 30% of its employees.
Crypto firm BlockFi files for bankruptcy as FTX fallout spreads
Crypto firm BlockFi has filed for Chapter 11 bankruptcy protection in the wake of FTX's bankruptcy.
What's the Meme?
Recommended Reads
How Did SBF Convince West Africans Crypto Was Their Future?
FTX’s Collapse Was a Crime, Not an Accident
Rising Tether Loans Add Risk to Stablecoin, Crypto World
MetaMask IP-Sharing Debacle Highlights the Scourge of Crypto Centralization
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