ACR #19: Bitcoin P2P Marketplace Shuts Down
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One of the most popular peer-to-peer (p2p) platforms for trading bitcoin and a few other digital assets for Africans, Paxful, has announced that it would suspend its operations.
According to the statement released by the crypto firm’s CEO, Ray Youssef, it is not yet sure whether operations will resume again. The statement, however, said Paxful Wallet would remain in operation for customers to retrieve their funds.
Youssef while talking about the event said that “While I cannot share the full story now, I can say that we, unfortunately, have had some key staff departures.” He also mentioned regulatory challenges, particularly in the p2p market and the United States.
What does this mean?
The announcement came as a shock to most industry stakeholders as the exchange was one of the biggest p2p marketplaces for Africans until its demise last week.
Paxful once announced that Nigeria was its biggest market, with over 2.5 million users and over $3.5 billion in trade volume. That shows that many Africans will be significantly impacted by this shutdown.
Although the full cause and repercussions of the closure have not been disclosed and realized, rumours have it that a co-founder disagreement and lawsuit might have hampered the exchange's operations. There are also regulatory concerns, especially in the United States where it is headquartered. It is noteworthy that Binance is also facing heat from US regulators.
Ray Youssef revealed in a Twitter Spaces session on Tuesday after the shutdown that the regulators in the United States were impossible to satisfy. “The regulators still don’t get it. They grow more suspicious every day.”
The CEO has assured that all customer funds were safe and urged them to withdraw their funds from the platform, ideally opting for self-custody if possible. As an update on Wednesday, Youssef tweeted that he will not be withdrawing his Bitcoin until all the users on Paxful get their BTC out first.
Peer-to-peer exchanges have grown in popularity & volume over the past few years in most African countries becoming the most popular fiat-to-crypto on-ramp and off-ramp. This is because most banking institutions have refused to serve a lot of centralised exchanges.
For now, most of the crypto exchanges in trouble have a connection to the United States one way or the other, and so far we haven’t seen a significant collapse of any of the native African cryptocurrency exchanges yet. In search of alternatives, crypto traders & investors on the continent could turn to these local exchanges.
Or better still, innovators in the space could see this as an opportunity to build decentralised marketplaces that makes it easy to on-ramp and off-ramp fiat to crypto.
What else?
Nigerian Blockchain Property Startup, House Africa, Secures $400,000 in Funding
House Africa, a Nigerian property technology startup that offers digital tools for real estate digitization and transparency to property developers and their clients, has secured $400,000 in funding.
Binance, Showmax partner to deepen crypto adoption in Africa
Binance, a leading blockchain ecosystem and cryptocurrency infrastructure provider, has announced its collaboration with Showmax, Africa’s video streaming service to further promote crypto adoption in the continent.
Nigerian crypto foreign investment is at a record low: Study
The NBS reported that foreign direct investment (FDI) in Nigeria dropped by 33% last year due to a severe shortage of dollars. The shortage has also discouraged crypto companies from expanding into the country.
Paxful shutdown hits Nigeria harder than the rest of the world
The shutdown of the peer-to-peer (P2P) cryptocurrency marketplace Paxful has left its worldwide community searching for alternatives, but it appears to have significantly affected the Nigerian crypto community.
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That’s all for now. See you next week Monday!