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How Nigeria, Africa Got Hit By FTX’s Collapse Bullet

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FTX, youngest and richest crypto billionaire, Sam Bankman-Fried

How Nigeria and Africa in general got hit by the bullet of the collapse of cryptocurrency exchange, FTX is becoming even clearer.

This is because, African customers, startups and FTX’s employees lost millions in the crypto platform’s collapse.

The losses came from the over 100, 000 customers that FTX already secured from African customers and investors before it collapsed.

As a crypto exchange, FTX Once valued at $32 billion, was a platform where people could safely trade crypto and make returns.

Nigerians who needed such exchange to trade in crypto, following the ban placed on crypto transaction by the CBN, saw this as a good opportunity to jump on the train.

However, FTX’s CEO, Sam Bankman-Fried (SBF) mismanaged the funds his company received from investors and used billions of the money to invest in Alameda Research.

In fact, before it crashed, the crypto exchange was planning on opening an African-Nigerian office to cement its presence in Africa.

ALSO READ: #Cryptocrash: Why Bitcoin Price Will Fall To $10k

READ ALSO: Why Binance Is Backing Out Of FTX Buyoff Deal

It was also already processing billions of dollars each month in Africa. And, if it was already processing billions from African market, then it means that the crash could have affected many in Africa.

But how exactly was Africa hit? what is the extent of damage so far? Well. let’s take a look at some casualties.

Foremost among the African casualties is Nestcoin.

Nestcoin, a Nigeria crypto startup, got the heaviest impact of the bullet of Sam Bankman-Fried’s FTX collapse.

In an earlier statement acknowledging loss of funds to the collapsed exchange, Co-founder and CEO of Nestcoin, Yele Bademosi, said Nestcoin held its assets in FTX.

The Financial Times put the value of the assets at $4 million.

Consequently, the Nigeria crypto startup went on at least 3o% staff layoff to cushion the effect.

Nestcoin had raised $6.45 million in a pre-seed round earlier in 2022 but lost almost over $4 million to FTX crash.

While Nestcoin let go of some employees, those it retained had their salaries slashed. Information revealed that the startup slashed about 40% of the employees’ salaries.

Meanwhile, note that many crypto startups and investors in Africa got caught because FTX acted as a bank that offered them an 8% annual interest rate on the stablecoin stored on the platform.

So, with this enticement, many African customers fell into the trap.

Meanwhile, other African personalities who equally got miffed by the FTX collapse are:

Celebrities and campus ambassadors who were preaching the FTX gospel to potential investors and retail customers.

The second African casualties are the retail customers:

According to reports, some retail customers stored their assets on FTX in ranges between $7000 and 2 million dollars.
One of the investors who lost his fortune is Victor Asemota.

He tweeted saying he lost his life’s savings to the FTX collapse.

“All my UK ISA [Individual Savings Account, an account that allows users to save and invest free from UK tax] I saved for the past 15 years was what I lost.”

“You know those days you’d laugh at people who lose money in Ponzi schemes.

“I never knew it could happen to me. This is the biggest Ponzi scheme ever. It’s crazy — it’s the last thing anybody expected.”

Anthony Chinonso Ogbonna is the editor of Techuncode media. He is a seasoned journalist whose stint cuts across broadcast, print and, especially, the online media. A graduate of Mass Communication from the University of Nigeria, Nsukka (UNN), Anthony holds a Masters Degree in Multimedia Journalism. He aligns his belief with those of world tech communities, holding tenaciously that the world is solely driven and can only be best with tech. Furthermore, Anthony believes that technology is simple, fun and is not what one, especially Africans, should be scared of, hence, his passion for telling compelling stories about tech in ways relatable to the ordinary user. He has his hobbies in reading and designing (new hobby though.)

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