Several popular peer-to-peer crypto marketplaces' have shut-down operations recently. | Infographic: Ayomide Agbaje — TechCabal Insights

Far from being a simple store of value or a hedge against inflation and currency depreciation, cryptocurrencies fuelled an epidemic of speculation in Africa. WhatsApp groups burst at the seams as young Africans piled on, hoping to get trade “signals” to guide their margin trades. And prophets predicted trade swings on social media. Outside the stablecoin model, the cryptocurrency craze in Africa, like its cousins anywhere else on earth, was built on zero utility and plenty of hopium. It made a few rich and popular. But it did not do much else. Even though for some reason, CNBC thinks Bitcoin will, “blow up Africa’s $86 billion banking system.”

Instead, in the last six months, the lack of cheap money occasioned by rate increases from central banks is forcing the cracks in crypto’s carefully designed exterior to crack. After FTX, which had a large ground game in Africa, complete with university ambassadors and a rural outreach programme, collapsed, three other Africa-focused crypto exchanges have shut down recently, including Localcryptos, Localbitcoins and most recently, Paxful.

When Paxful announced it was shutting down last week, 46-year-old Ray Youssef, who served as founder and CEO, blamed “key staff departures” and “regulatory challenges” for the decision. What he did not say was that issues with his co-founder, Artur Schaback, had gotten to a head. Schaback had sued his partner and co-founder in January this year for, among other things, “an illegal plan to avoid international sanctions on transactions into and out of Russia”. Other details of Paxful’s sordid backyard are contained in this CoinDesk report. But it is instructive to note that until the sudden announcement of the exchange’s closure, Youssef gave no indication of trouble, as he put out Bitcoin platitude after platitude sprinkled with political tweets, mostly aligning with one of Nigeria’s presidential candidates, Peter Obi. A substantial portion of Obi’s supporters is predominantly young dwellers in cities—the same demographic of users targeted by Paxful and other crypto services.

One can argue that one of the most significant impact of cryptocurrencies—globally—is the acceleration of retail central bank digital money a.k.a CBDCs. Indeed the excesses of the crypto-verse plus the growing desire of governments to control every inch of how their respective governed masses live is part of the motive behind (and justification of) CBDCs. “. If you want to use digital assets, use eNaira. It has all the properties of a digital asset,” one central bank official quipped in Nigeria.

Like FTX, the sudden shutdown of Paxful, which was closer to its users in Nigeria and Kenya, may force crypto users in Africa to second-guess their investments. Or it may not (for the most committed or most grifting). What is important is that it is one less blocker in the conversation about how absurd the story of crypto in Africa has been sold. It may make it easier to call out the outright rackets that have never been called out.

That’s me being hopeful. If the crypto group I am in is any indication, the addiction to fixes from crypto wins grift is still too strong.

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