Jan 31, 2023

Mawazo Writing Africa

Writing about the main

Crypto market meltdown rattles 12 million East African investors

A painful financial journey ensued for at least 12 million East Africans, who now face billions of dollars in losses from both the cryptocurrency market crash and a series of related Ponzi schemes that have unfolded and “get rich quick” in the wake of the crisis.

As extreme market conditions force legitimate crypto exchanges to shut down shop with many layoffs, reports are emerging of some crypto investment schemes disappearing with investors’ funds. This raises questions about the future of unconventional assets.

Bitcoin, the world’s oldest and largest cryptocurrency, which was worth $67,566 as of November last year, has lost at least 70% of its value and is now struggling to make it to the top to stay at the $20,000 mark.

Fraudulent schemes

In general, the total global market value for all crypto assets has fallen from $2.8 trillion last November to around 890 Billions of US dollars fell, which has plunged several East Africans’ holdings of cryptocurrencies into financial turmoil.

There are also increasing cases of fraudulent schemes surrounding cryptocurrency investments, which according to the US Federal Trade Commission have led to this that around 26,000 people have lost over $1 billion since 2021 in the US alone.

Just two weeks ago, some cryptocurrency founders disappeared after finding Kenyan potential in defrauded investors of at least $8.5 million barely six months after they surfaced on the internet, and this week four young men were brutally accused of alleged crypto fraud.

Read:Crypto- Market meltdown linked to inflation-driven sell-off

In Uganda, over 5,000 victims of a crypto-pyramid scheme recently petitioned the government to reimburse them about $2.7 million they lost to an alleged state-licensed company

Kenyan blockchain expert Prof. Bitange Ndemo told The EastAfrican that this season marks the beginning of the waning success of ponzi schemes clad in crypto assets are as humans have started to learn their anatomy and will avoid them.

Read: 4 Million Kenyans Suffer Crypto Crash Losses

Hope springs forever

Prof. Ndemo, former chief secretary of the ICT ministry and chair of the Blockchain and Artificial Intelligence Taskforce, said many people are gullible towards crypto scams due to a lack of knowledge coupled with a poor appetite for quick income.

“Meanwhile, many have learned to be particularly wary of systems that promise huge guaranteed returns,” said Prof. Ndemo.

“Every fraud thrives on a lack of knowledge. The more people learn about the emerging blockchain technology, the fewer these pyramid schemes will exist,” said George Mwakisha, East Africa country representative for Binance, a global crypto exchange.