- FTX promoted itself in Africa by noting that cryptocurrencies would protect people’s money from inflation, according to the Wall Street Journal.
- Many African currencies slumped last year as Federal Reserve rate hikes pushed the dollar higher.
- FTX also hosted exclusive events and offered African a $5 sign-up bonus, the WSJ reported.
FTX promoted its exchange in Africa by noting that investing in cryptocurrencies could help prevent people’s money from devaluing due to high inflation, according to the Wall Street Journal.
The crypto group reportedly introduced itself to potential clients by promising that its dollar-pegged stablecoins, which were priced in the dollar, were safer investments than local currencies.
FTX also hosted glamorous events for young Nigerians and offered all new clients a $5 sign-up bonus, the WSJ reported.
International clients lost all their money when the exchange crashed in November, with disgraced former CEO Sam Bankman-Fried arrested in the Bahamas and extradited to the US on eight counts of fraud the following month.
Bankman-Fried also worked to promote FTX in Africa, announcing on Twitter on Nov. 3 that the exchange had begun accepting deposits in West African CFA francs. FTX filed for bankruptcy just eight days later.
African currencies such as the Nigerian naira, the Ghanaian cedi and the Malawi kwacha slumped against the dollar last year as aggressive tightening by the Federal Reserve fueled capital outflows from developing markets.
When US interest rates rise, international investors seeking higher yields tend to pile on the dollar, which devalues currencies elsewhere.
Prior to 2022, crypto bulls had long pitched digital currencies as a potential hedge against inflation in the developing world.
But rising interest rates, a liquidity crisis and a series of high-profile bankruptcies rocked the sector last year, sending Bitcoin plunging more than 60% to below $17,000.
Read more: The Fed has the world in its hands, and its aggressive moves are creating global economic chaos that could come back and hurt the US.
