In the world of crypto, the meteoric rise and subsequent collapse of FTX have left a trail of devastation, particularly among African students who believed in the platform. We’ll delve into their journey from trust to despair and how this crypto empire’s demise became a life-altering event for many.
FTX : A Crypto Dream Turned Nightmare
When FTX entered the African market, it seemed like a dream come true for tech-savvy youths across the continent. Just like Binance and KuCoin, FTX Africa aimed to tap into the vast and eager market of young, tech-focused Africans. To reach this demographic, they devised an innovative program that recruited university students as “Brand Ambassadors” to promote FTX and host meetups on their campuses.
These enthusiastic students, driven by the allure of crypto wealth, invited friends and family to join the FTX platform. Little did they know, this decision would soon turn their lives upside down.
Riding the Crypto Wave With FTX
FTX’s Brand Ambassadors were handsomely rewarded for their efforts. They received 30% of transaction fees from those they referred to FTX and an additional monthly bonus of $500, all outlined in the FTX contract. However, while these students knew how to generate excitement about crypto, they often lacked the essential knowledge needed to navigate the volatile crypto markets.
From Hope to Desperation
The collapse of FTX in November sent shockwaves throughout Africa, leaving countless users without access to their funds. Students, their friends, and family members were now bearing the brunt of this financial catastrophe. In the worst cases, individuals invested their life savings on the platform, only to watch it evaporate.
One student recalls the heartbreaking moment when a fellow ambassador contacted them in tears because their referred users had invested 20 million naira (approximately $26,000) on their recommendation.
Seeking Answers and Accountability
As the FTX collapse unfolded, confusion and anger spread like wildfire. The official FTX Africa Telegram group, with over 10,000 members, became a hub for users seeking answers. Some of the former ambassadors faced backlash from their communities, as their referrals lost significant amounts of money.
The situation escalated to the point where ambassadors feared for their personal safety, particularly in the eastern region of Nigeria, where threats of violence became all too real.
Hey guys, as a brand ambassador, you get an opportunity to earn up to 40% commission when you invite your friends to join FTX 🥳— FTX Africa (@FTX_Africa) August 6, 2022
Sign up here to become an FTX Brand Ambassador today: https://t.co/0mKEUHvtB3pic.twitter.com/1BlRFem6Wf
A Lesson in Crypto Education
While the FTX program promised educational benefits, its primary goal was to increase trading volumes. Even though the focus was on promoting the brand, these ambassadors strived to educate their communities about crypto. Many were from rural areas where access to education and crypto resources was limited, making them unwitting symbols of FTX’s rise and fall.
An Emerging Market’s Plight
Nigeria’s struggle with inflation and monetary instability had made FTX a beacon of hope for many. FTX was not just about crypto trading; it also offered a means for locals to convert their devaluing Naira into stablecoins like USDT.
Crypto adoption extended beyond university students, as FTX became a de facto bank for many in the region.
The Fallout and Ongoing Skepticism of FTX
FTX’s impact reached far and wide, touching other African nations like South Africa and Ghana. It’s evident that Africa’s emerging markets are fertile ground for crypto adoption. But as FTX’s legacy leaves a bitter taste in the mouths of its former users, crypto enthusiasts, especially students, have become increasingly skeptical about similar ambassadorship programs, even when run by well-established exchanges like Binance.
The FTX experience serves as a harsh lesson for all, a reminder of the volatile nature of crypto and the importance of due diligence. Today, African students and crypto enthusiasts are no longer just considering the potential rewards of crypto but also the risks and the reputation at stake.
As the crypto landscape continues to evolve, it is a testament to the resilience of these students and the growing importance of financial literacy in an increasingly digitized world.