Africa’s crypto winter: arrest of FTX’s boss prompts calls for tighter regulation
At the heart of the Africa’s crypto boom was FTX, an international exchange run by US crypto guru Sam Bankman-Fried, whose collapse in November has sent shockwaves across the continent, along with calls for more regulation.
An unknown number of African customers held funds on the Bahamas-based platform, as did numerous African startups. On Tuesday (December 13), police in the Bahamas announced the arrest of Bankman-Fried for alleged “financial offences” against laws in the US and The Bahamas.
While crypto proponents insist the technology has a future in Africa, the major industry shock could put the brakes on its rapid growth. Many Africans who took a punt on cryptocurrencies did so on FTX that advertised extensively in Africa, hiring a PR and marketing manager for the continent and holding events in Ghana, Nigeria and South Africa. It even partnered with Nigerian universities to hold seminars and conferences and enlisted university campus ambassadors working on commission.
Yet, African customers have been badly affected by FTX’s sudden collapse. With panic withdrawals, many of them unmet, in countries including South Africa, Egypt, Uganda, Tanzania and Senegal, an unknown number of African users are thought to have lost funds. African companies with direct exposure to FTX were also affected. Meanwhile many users in the Bahamas, where FTX is based, and the US, were reportedly able to withdraw their funds before the full crisis hit.
Experts are now concerned the collapse could have lasting consequences especially in Africa. For years, central banks across the continent have been warning against the use of cryptocurrencies, including in Nigeria, Ghana, Kenya, South Africa, Tanzania, Uganda, Zambia and Namibia, but with public trust in institutions low, warnings did little to dissuade would-be investors. But following the FTX disaster, industry experts, economists and users agree that there is the urgent need for much tighter regulation.