Kenyans Lose Millions Overnight After Ksh3.9 Trillion Company Collapses

A hacker wearing a hoodie operates a computer
A hacker wearing a hoodie operates a computer.

As FTX crypto exchange company's woes continue to spread heartache on the world's rich and mighty, a section of recluse Kenyan crypto diehards are counting their losses estimated to run into millions of shillings.

Trouble at the global crypto company began Monday, November 7, after reports emerged that the firm, which was in March 2022 valued at Ksh3.9 trillion ($32 billion), was battling liquidation.

Following the panic caused by the reports, a number of investors rushed to the platform to withdraw their finances worth Ksh79 billion further plunging the company that was ranked the third-largest crypto trading programme at its peak into financial obscurity.

Soon after, the leader of Binance, the world's biggest bitcoin and altcoin crypto exchange platform owned by Changpeng Zhao, expressed interest in rescuing the company headquartered in Hong Kong by making a bid to acquire it.

A mobile phone showing stock trading on FTX platform.
A mobile phone showing stock trading on FTX platform.

Binance, however, walked away from the deal accusing FTX of mishandling customer finances leaving the company exposed.

"As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged US agency investigations, we have decided that we will not pursue the potential acquisition of FTX.

"In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help," announce Binance in a statement on Wednesday, November 9.

Coindesk, a crypto industry outlet, estimated that in the 24 hours since the collapse of the deal, investors who traded on the platform lost ksh84 billion (USD700 million).

The traders had stored the money on the crypto exchange platform in form of long positions or bets for higher prices.

Kenyans who have been trading on the platform since the company expanded its presence in Kenya in March 2022 found themselves on the wrong footing.

In March, the global company partnered with a local finance firm with the aim of expanding digital currencies and the web3 in Africa.

Part of the plans was the construction of digital infrastructure that would connect Africa's finance-minded individuals to opportunities presented by Web3, as per Bloomberg Businessweek.

Prior, the company had Kenyan universities including Technical University of Kenya (TU-K) and Multimedia University (MMU) to train students on how to trade on crypto platforms.

As of July 2022, Kenya was the highest ranked African country in crypto trade after 4 million individuals made investments in the industry.

In the recent years, however, the trade has been on the decline after scammers infiltrated the industry and conned the individuals.

In March, thousands of Kenyans lost Ksh1.1 billion (USD10 million) in a cryptocurrency scam after they were duped by a company Christened Bitstream Circle whose records showed that it was registered in the United Kingdom.

The individuals were lured into the Ponzi scheme after being promised a daily return on investment of between 5% and 8%.

The scheme expanded to include 11,000 members drawn from seven countries and showed that a Chinese National Quin Yang was registered as its director.

A graphic representing Bitcoin - a form of cryptocurrency.
A graphic representing Bitcoin - a form of cryptocurrency.
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