Barely two years ago, this was one of the most popular social media slang. The term, which means We’re All Gonna Make It, was a bold declaration that crypto would enrich everyone who actively participates. Everyone who didn’t believe in this dream was supposedly NGMI (Not Gonna Make It).
Predictably, 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 took hold. The peer-to-peer lending platform, Paxful, claimed its data showed in 2021 that Africa was leading the “global cryptocurrency adoption.” Africa pulled many eyeballs in this period as crypto’s “next frontier.” Bitcoin, Web3 and NFTs showed so much prospect for the continent that many investors raced to cash in on this wave.
As of Q1 2022, global VC funding for crypto peaked at $12.3 billion, according to Pitchbook data. However, this reality has quickly changed. Crypto took one of the hardest hits from the 2022 bear market as funding has become hard to secure. In Q1 this year, VCs slashed funding by 80% to $2.4 billion, and the axe didn’t spare African startups.
Consequently, this tough environment started squeezing out crypto startups. Crypto lenders, Celsius and Voyager, were the first to fall, and the implosion of FTX took the cake of media conversations. Unfortunately, this line of dominos also includes Africa-focused crypto startups.
Notably, this is not the first time crypto firms are shutting down in Africa. For instance, in 2018, Golix, a Zimbabwean-based cryptocurrency exchange, shut down operations on orders from the country’s Reserve Bank. Also, iCE3X, a South African crypto exchange, shut down in 2021 due to “liquidity issues”. That said, here’s a list of the most popular Africa-focused crypto companies that have shut down because of the bear market.
After operating for seven years, Paxful, a global Bitcoin marketplace with strong roots in Africa, announced its shutdown earlier this month. Ray Youssef, Paxful’s CEO, said on a Twitter space that the decision to close the company became necessary because there were no engineers, compliance team members, or security personnel left at the company. He also said in a blog post that “regulatory challenges for the industry continue to grow, especially in the peer-to-peer market and most heavily in the US.” Before its shutdown, Nigeria, Cameroon and Kenya were its biggest markets.
However, the bear market was not 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 getting kicked out of the company over a year ago, Schaback sued the company in January for, among other things, “an illegal plan to avoid international sanctions on transactions into and out of Russia,” according to a court docket hosted on CourtConnect.
On April 13th, Lazerpay, a web3 and crypto payment company, announced that it was closing shop. Emmanuel Njoku, Lazerpay’s CEO and founder, made the announcement, citing its struggle to raise funds. “Today, we announce the difficult decision to cease operations at Lazerpay. Despite our team’s tireless efforts to secure the necessary funding to keep Lazerpay going, we were unable to close a successful fundraising round. We fought hard to keep the lights on as long as possible, but unfortunately, we are now at a point where we need to shut down,” he said in a tweet.
Before its shutdown, the seventeen-month-old startup had onboarded over 3000 businesses, helping them to receive and make payments in Naira, cedis, Kenyan Shillings, Rwandan Shillings, US Dollars, and UAE Dirham. It also had the backing of Shola Akinlade of Paystack, Nuwa Capital, Voltron Capital and Nestcoin. But now that its lights are out, Lazerpay has put its IP up for sale.
LocalBitcoins, one of the longest-running Bitcoin exchanges, announced its shutdown in February, citing the “ongoing very cold crypto winter.” The ten-year-old exchange started recording excruciatingly low trade volumes because of the bear market. In the last four months before its shutdown, LocalBitcoins averaged between $5 million and $7 million in weekly trading volume. That was a far cry from 2017 when it surged to above $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 pioneer status. It was already operating years before the emergence of Binance and Coinbase.
LocalCryptos, a peer-to-peer crypto exchange, marked its 5th birthday by announcing a shutdown of its operations in October 2022. In its announcement, the company cited the market conditions and regulatory uncertainty as its reasons for closing shop.
LocalCryptos, which originally launched as LocalEthereum in 2017, gained popularity for innovating a non-custodial web-based wallet for P2P crypto trades. It boasted of gaining more than 400,000 users in its lifetime and recorded a 75% growth spike in African users in July 2022.