FTX recruited customers in Africa by signaling that crypto would protect them from soaring inflation, report says
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- FTX promoted itself in Africa by signaling crypto would shield people's money from inflation, according to the Wall Street Journal.
- Many African currencies plummeted last year as the Federal Reserve's interest-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 signaling that investing in crypto could help stop people's money being devalued by high inflation, according to the Wall Street Journal.
The crypto group reportedly pitched itself to potential customers by promising that its dollar-pegged stablecoins – whose prices were fixed to the greenback – were safer investments than local currencies.
FTX also ran glamorous events for young Nigerians and offered all new customers a $5 sign-up bonus, the WSJ reported.
International customers lost all their money when the exchange collapsed 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 November 3 that the exchange had started accepting deposits in West African CFA francs. FTX filed for bankruptcy just eight days later.
African currencies like the Nigerian naira, the Ghanaian cedi, and the Malawian kwacha plunged against the dollar last year as the Federal Reserve's aggressive monetary tightening fueled capital outflows from developing markets.
When US interest rates rise, international investors seeking higher yields tend to pile into the greenback – which devalues currencies elsewhere.
Before 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 string of high-profile bankruptcies rocked the sector last year – which led to bitcoin plunging over 60% to under $17,000.