FTX: A Heist Of West Africa

New Century, Old Tricks

I don’t consider myself a crypto aficionado by any stretch of the imagination and I’m most certainly not well versed in finance. My acknowledgement of these facts has led me to make more of a concerted effort to learn about these disciplines because I believe this lack of knowledge is a weakness in the black and African community. When looking back at the history of the continent and our various nations, it’s clear to see that the single motivating factor for exploitation has been profit and as a result, greed.

Many of you probably have no idea what the FTX scandal is. Neither did I. Maybe you’ve heard the term FTX? Heard it mentioned in passing and thought, ‘that’s all that finance mumbo jumbo, that’s got nothing to do with me.’ If you felt this way so did I and I was wrong.  Without knowing what happened and why, you’re setting yourself up for possible fraud in the future because these kinds of scams are going to become more common in Africa. I hope this article will serve as a warning to everyone of what can happen when the western snake oil is brought to town. The same way we sold our kin for muskets and gold hundreds of years ago, is the way we’re doing so today.

The crypto currency exchange company FTX scammed West Africans out of billions of dollars in one of the biggest frauds in decades. How the CEO Sam Bankman-Fried exploited the naivete of desperate Africans was wickedly opportunistic. African desperation was his avenue

FTX was a transaction fee based exchange for crypto currency. It was particularly alluring to people who were not tech savvy and wanted to utilise crypto in a traditional exchange system they were familiar with. One of the big issues facing African economies is the instability of our currencies. There is more incentive to trade in stable currencies like dollars and pounds as inflation rises.Why those currencies are stable and ours is not even though we are the suppliers of resources is a mystery no one has been able to answer. I am making this the subject of a future article because this is something I’ve always wanted to know; why is the Naira so weak compared to the pound?

FTX, short for Futures Exchange, was offering the average Nigerian a way to convert Naira to a crypto token that was tied to US dollars. This would allow customers to get around their government’s financial regulations and on top of that FTX were setting an unheard of 8% interest rate. Now when a deal sounds too good to be true, it usually is.

In reality, FTX were using the investments into their exchange to make bets via Bankman-Fried’s trading firm Alameda Research. This is similar to what banks do with your money. However, while banks have protections and regulations to guard against total collapse if bets don’t pan out, FTX in the crypto space was operating without checks and balances. So, when their bets started going bad and they went into extreme debt, Bankman-Fried had a problem; how do you recoup billions of dollars fast when the people you owe the money to are in the west?

He did what the west do when they’re in a bind; turn to Africa.

Bankman-Fried hatched a plan to exploit African desperation and fear to make enough money to offset the debts he had accrued in the west. The way FTX did this was where the real manipulation occurred. They sold FTX to West Africa with glitz and glamour, parties, events and brand ambassadors to win hearts, minds and what was in your wallets.

The goal was to open as many accounts in Africa as possible as fast as possible to pay off what they owed. They had a big party in Lagos with dancing women in bikinis on the beach to promote FTX to potential investors and clients. With the Federal Reserve’s interest rate hikes causing massive pressure on the Nigerian Naira and Ghanaian Cedi, FTX was like an angel from heaven come to save Africans looking for a way out of the economic quagmire.

FTX recruited our youth who had the energy, drive and hope of a better future and baited them with rewards for inadvertently selling out their own people. Five dollar bonuses and free giveaways fuelled the drive and brand ambassadors were given monthly sales targets as high as 1 million dollars a month in exchange for small bonuses to them.

You see, FTX employed the exact same principles used during slavery where they got Africans to sell out Africans for pay. In the same way, those Africans had no idea the horrors they were selling their kin into. This scheme simply wouldn’t have worked in the west as the incentive of tying crypto to dollars is much less attractive to a society far more tuned into the market and already trading in stable currency.

Only 8 days before the FTX collapse Sam Bankman Fried announced on twitter that his exchange was accepting deposits from Benin, Burkina Faso, Ivory Coast, Guinea Bissau, Mali, Niger, Senegal and Togo, targeting French speaking west African countries using the CFA Franc. At its peak FTX was handling over 500 million dollars in trading volume a month. And guess where most of that money was coming from?….Nigeria

Now I don’t want to go into the currency fiasco engulfing Nigeria at the moment but the country is already struggling economically yet it was financing the fraud of a western firm trying to pay off debts. It is truly astonishing.

The fact that FTX targeted west African students and even paid them to throw events and parties promoting it all, while knowing they were about to go bankrupt, is a sign of how nefarious this plot was. Bankman Fried amassed a wealth of over 26 billion dollars and is alleged to have donated millions to lawmakers campaigns in the US in an attempt to influence legislation that would be favourable to FTX.

The belief that western ice is colder than African ice is how people like Bankman Fried and other western corporations entice the naive into such schemes. Sadly this isn't the first and it won't be the last time this happens in Africa.

I write about culture, society and media with special attention to their intersection with Africa and the diaspora. My short films on various topics are available to watch on my YouTube page via this LINK to all my social media.