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FTX collapse crushes crypto dreams in Africa and beyond

LAGOS/BANGKOK — Days before his FTX cryptocurrency exchange collapsed, co-founder Sam Bankman-Fried tweeted “Hello, West Africa!” — his latest nod to a region where a growing number of kitchen table investors had put their faith, and savings, in FTX.

In South Africa, Nigeria, and Ghana, FTX held a series of swish events in the months leading up to its bankruptcy filing in the United States on Nov. 11, which sent shockwaves through the crypto world and major coin prices plummeting.

At least $1 billion of customer funds have vanished from the collapsed crypto exchange, Reuters reported, and it is now the subject of investigations by authorities in the Bahamas — where it was based — for “criminal misconduct.”

In Nigeria, where many young people see cryptocurrency as offering a chance for income amid economic woes including double-digit inflation and high unemployment, FTX’s demise has been painful.

“It hurts more than I can express,” said Osarieme Aghedo, who works in marketing at a Nigerian startup and had $8,720 in FTX as news of its implosion circulated on Twitter.

He tried in vain to withdraw his money, which he had hoped to use to buy a car next year.

Mr. Aghedo said he had been trading in digital currencies since 2017, and had lost money before as their values dipped.

But the FTX loss has hit him harder, he said, because he thought it was “risk free” and kept his savings there.

Like him, many Africans used FTX as a bank, as it offered 8% annual interest rate on the stablecoin stored on the platform. Customers also used FTX to convert their local currencies to dollars.

Even as regulators crack down on crypto, people in developing nations are embracing virtual currencies to avoid high commissions on remittances, and to preserve their savings in times of hyper inflation and political instability.

Many exchanges have courted users in Africa, and crypto adoption is growing in the continent, with Nigeria ranked 11th on a global index by research firm Chainalysis, which also includes Kenya and Morocco in the top 20.

Despite the FTX blow, Mr. Aghedo said he was not giving up on crypto.

“Crypto has connected the global economy. I receive and pay people in crypto from many countries, and that would have been impossible before,” he said.



Cryptocurrencies were designed to be free of authorities such as governments and central banks. They allow for “peer-to-peer” transfers between users online without any intermediaries.

Their relative anonymity offers a haven for criminals, extremist groups and sanctioned governments — but champions say they also support citizens caught up in crises.

Now, crypto’s highest-profile collapse in recent years has left millions in the lurch, and it is unclear how many FTX users — estimated at about 1 million in the United States and many more across the world — will be able to recover their funds.

South Korea, Singapore and Japan accounted for the highest number of visitors to until October, according to data compiled by crypto site Coingecko.

Singaporean Edward Choy was at work when he heard about a liquidity crunch at FTX. He immediately began getting his deposits out, just hours before withdrawals were suspended.

“I was able to pull out about 90% of my funds,” said Mr. Choy, 43, an actor and voice artist who has been a crypto investor since 2017.

“But I know many others were unable to get anything out — some had put nearly all their assets into FTX and have now lost everything,” he told the Thomson Reuters Foundation.

Regulation of crypto currencies has come into sharp focus following the collapse of several platforms this year and increased volatility, with bitcoin down more than 70% from an all-time high of $69,000 in November last year.

Several investors have also blamed regulators for failing to regulate platforms and protect users.

On a Facebook group for crypto users in Singapore, Alfred Lee posted: “Shifted my six-figure portfolio from Binance to FTX. Didn’t manage to get out fast enough as I was on vacation,” he said, referring to his move after Binance was banned in Singapore last year for breaching local payment services rules.

The Monetary Authority of Singapore (MAS) said it could not protect local users from the FTX collapse, as it had not given FTX a license, and that the exchange had operated offshore.

“The most important lesson from the FTX debacle is that dealing in any cryptocurrency, on any platform, is hazardous,” MAS said in a statement last week.

“As MAS has repeatedly stated, there is no protection for customers who deal in cryptocurrencies. They can lose all their money.”

In Ghana, where authorities have not commented on the FTX collapse, 21-year-old content creator Elisha Owusu Akyaw, who often posts about crypto on Twitter and TikTok, said he had $200 on FTX when it collapsed.

“It’s now worth just $6,” he said, adding that he had earlier held the equivalent of about $70,000 on the platform, but had withdrawn most of it some months ago as the value of cryptocurrencies fell.

Mr. Akyaw, who has collaborated with FTX and other exchanges to boost their products to his more than 12,000 followers on Twitter, said he was worried about how the ongoing chaos would impact his role as a crypto influencer.

“The money lost, for me, isn’t the biggest focus,” said Mr. Akyaw, who began trading in crypto in his teens.

“It’s the impact it has had on the reputation of the crypto industry … it’s about trust in a space I’ve dedicated most of my life to.” — Thomson Reuters Foundation


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