The collapsed crypto exchange FTX reportedly used the lure of high earnings to convince African university students to become its ambassadors. In addition to encouraging new FTX investors to use the platform, student ambassadors were also required to teach them about crypto and the blockchain. Some of the students insisted they will not quit crypto despite losing funds following FTX’s collapse.
Recruited Users Told of Benefits of Using FTX
The collapsed crypto exchange FTX reportedly used the promise of significant rewards to encourage African students to recruit new investors to its platform, a report has said. The report added that in certain cases, the students were reportedly told to ensure the recruited investors deposited funds or traded on the platform.
Besides encouraging the new investors to use the platform, the students were also required to educate them about crypto and blockchain technology. The students had to emphasize to fellow students the benefits of using FTX. According to a Business Insider report, successful students were told they could earn commissions as high as 40%.
However, as per the report by CNBC, many of the students who acted as FTX’s brand ambassadors in Nigeria before it collapsed were not aware of the crypto exchange’s precarious financial position. Consequently, when the crypto exchange collapsed in the last quarter of 2022, the students were still actively recruiting, and just like other FTX users, they too lost money.
As expected, the crypto exchange’s collapse and the impact it has had on the broader crypto industry have amplified calls for tougher regulation of crypto entities. In Africa, regulators such as the Rwandan central bank have used FTX’s collapse to highlight the dangers of crypto trading.
‘Too Big to Fail’
Yet, despite the threat of stricter regulation as well as the public’s now dimmed view of the crypto industry, some of the students quoted in the report said they are undeterred. One of the students, Imran Yahya, FTX’s ambassador at Bayero University in Nigeria, said the crypto exchange’s collapse only proved that “no company is too big to fail.” However, instead of quitting crypto, Yahya reportedly said he planned to be more careful this time.
Fortunate Atueyi, FTX’s ambassador at the University of Nigeria, said he too will be more careful and not overly trusting in the future.
“I kind of trusted them. I was like, I was a part of people saying FTX is too big to fail. I don’t think it is, like, wise to leave your money there, and they have full control over your money. So are just like any bank,” Atueyi said.
Another student, Gabriel Trompiz, argued that while centralized exchanges like FTX have proved to be helpful in driving the crypto adoption agenda, relying on them “is like contradicting yourself.” Therefore, to ensure that he does not lose out again in the future, Trompiz said he will prioritize investing in decentralized finance (defi) platforms.
Register your email here to get a weekly update on African news sent to your inbox:
What are your thoughts on this story? Let us know what you think in the comments section below.
#Africa, #AfricaCryptoAdoption, #Blockchain, #CryptoExchange, #CryptoIndustry, #DecentralizedFinance, #FTXCollapse