Global Courant 2023-04-24 17:10:44
WAGMI.
Barely two years ago, this was one of the most popular social media slang. The term, meaning we’re all going to get it, was a bold statement that crypto would enrich everyone who actively participates. Anyone who didn’t believe in this dream was supposedly NGMI (Not Gonna Make It).
As might be expected, Africa was not left out of the excitement. A big part of the crypto promise for Africa was that it would bring prosperity to the continent. That promise held. The peer-to-peer lending platform, Paxful, claimed that its 2021 data showed Africa was leading the “global adoption of cryptocurrency.” Africa attracted a lot of attention as crypto’s “next frontier” during this period. Bitcoin, Web3 and NFTs showed so much prospect for the continent that many investors rushed to cash in on this surge.
As of Q1 2022, global crypto VC funding peaked at $12.3 billion, according to Pitchbook data. However, this reality has quickly changed. Crypto took one of the hardest hits of the 2022 bear market as funding is hard to come by. In the first quarter of this year, VCs slashed funding by 80% to $2.4 billion, and the ax didn’t spare African startups.
Consequently, this tough environment started to squeeze crypto startups. Crypto lenders, Celsius and Voyager, were the first to fall, and the implosion of FTX took the icing on the cake of media talks. Unfortunately, this series of dominoes also includes Africa-focused crypto startups.
Notably, this is not the first time crypto companies have closed their doors in Africa. For example, in 2018, Golix, a Zimbabwe-based cryptocurrency exchange, stop operations by order of the country’s Reserve Bank. iCE3X, a South African crypto exchange, was also shut down in 2021 due to “liquidity issues”. That said, here is a list of the most popular Africa-focused crypto companies that have closed due to the bear market.
Paxvol
After operating for seven years, Paxful, a global Bitcoin marketplace with strong roots in Africa, announced its closure earlier this month. Ray Youssef, CEO of Paxful, said on a Twitter space that the decision to close the company became necessary because there were no technicians, members of the compliance team or security personnel left at the company. He also said in one blog post that “regulatory challenges for the industry continue to grow, especially in the peer-to-peer market and most severely in the US.” Before the shutdown, Nigeria, Cameroon and Kenya were the largest markets.
However, the bear market wasn’t the only problem Paxful had. The now-defunct exchange is also facing a lawsuit from its co-founder and former Chief Operating Officer, Artur Schaback. After being ousted from the company more than a year ago, Schaback sued the company in January for, among other things, “an illegal plan to circumvent international sanctions on transactions in and out of Russia,” according to a court role hosted on CourtConnect.
Lazerpay
On April 13, Lazerpay, a web3 and crypto payment company, announced it was closing shop. Emmanuel Njoku, CEO and founder of Lazerpay, made the announcement, citing his struggle to raise funds. “Today we announce the difficult decision to close operations at Lazerpay. Despite our team’s tireless efforts to secure the necessary funding to keep Lazerpay running, we were unable to close a successful fundraising round. We fought hard to keep the lights on as long as possible, but unfortunately we have now come to a point where we have to close,” he said in a statement. tweet.
Before closing, the 17-month-old startup had more than 3,000 companies on board, helping them receive and make payments in Naira, cedis, Kenyan shillings, Rwandan shillings, US dollars and UAE dirhams. It also had the support of Shola Akinlade of Paystack, Nuwa Capital, Voltron Capital and Nestcoin. But now that the lights are out, Lazerpay has put its IP up for sale.
LocalBitcoins
LocalBitcoins, one of the longest running Bitcoin exchanges, announced the closure in February, citing the “ongoing very cold crypto winter”. The decade-old exchange started taking excruciatingly low trading volumes because of the bear market. In the last four months before the shutdown, LocalBitcoins had an average weekly trading volume of between $5 million and $7 million. That was quite different from 2017, when it soared to more than $100 million in consecutive weeks, according to data from CoinDance.
At its peak, the Helsinki-based company had a strong presence in Africa thanks to its pioneering status. It was active years before the rise of Binance and Coinbase.
Local cryptos
LocalCryptos, a peer-to-peer crypto exchange, celebrated its 5th anniversary by announcing the cessation of operations in October 2022. announcement, the company cited market conditions and regulatory uncertainty as reasons for closing shop.
Originally launched as LocalEthereum in 2017, LocalCryptos gained popularity by innovating a non-custodial web-based wallet for P2P crypto transactions. It boasted that it had gained and registered more than 400,000 users in its lifetime a 75% growth peak in African users in July 2022.
