African crypto scams

As crypto currency investing continues to grow unabated with new currencies launching everyday, so we also bear witness to a proliferation of scams on the blockchain. Investment scams have been around for hundreds of years preying on all types of investors from the complete novice to the more astute investor.

Crypto scams however are in another league because the crypto market is still unregulated. Another reason is because crypto as an asset class is heavily weighted in favour of retail investors of which many are complete novices when it comes to investing. Since August last year crypto scams have grown by 1000% in the US alone.

Most of the crypto scams on the African continent are coming out of South Africa and Nigeria. Last year South Africa played host to allegedly the world’s largest crypto scam. MTI (Mirror Trading International) used MLM (multi level marketing) tactics to attract deposits from customers who believed they could earn lofty returns on their investment in bitcoin.

Its CEO Johann Steynberg disappeared off the radar in December last year. The company liquidated shortly after that with it’s investors losing a whopping $589 million!

Unfortunately it appears that the largest crypto scam of 2021 may also derive from South Africa. In April this year, Raees and Ameer Cajee, founders of Africrypt, absconded with $3.6 billion worth of bitcoin! The brothers claim that they were hacked. However, since they have gone into hiding that claim seems spurious. Like MTI, Africrypt lured investors with highly improbable returns - double your money in only 7 months. The kind of returns one hopes for in online gambling.

With all the existing hype around crypto, many get-rich-quick schemes will naturally look to leverage all this hype. Remember to always research a prospective investment thoroughly, and if the value proposition seems too good to be true then it usually is.

Foreign Direct Investment

One of the narratives we’d like to see gain more salience over the coming years is around a wholly African entrepreneurial ecosystem. That is African’s making the majority of investments into African startups.

Presently the balance is still heavily skewed in favour of foreign investors. In its most recent newsletter, Africa: The Big Deal shares the data on all the investments that have taken place so far in 2021.

The findings show that only 30% of the investment deals done so far derive from firms headquartered on the African continent. The heavyweight foreign investor nations that make up the majority of the remaining 70% comprise of the US, UK, Japan and France.

In the News 🚀

🇪🇬 Egyptian celebrity-to-fans connection startup Minly has raised a $3.6M in seed round.

🇰🇪 Kenyan startup Ed Partners Africa, a non-banking financial institution serving affordable private schools, has raised $1.9 million to bolster its mandate to improve the quality of education received by learners from low-income communities.

🇫🇷 French private equity firm LBO France has committed to invest in Seedstars Africa Ventures $100 million fund designated for early-stage African tech startups.

🇲🇬 Malagasy ed-tech startup Sayna has secured an undisclosed round of funding to help it expand its training programs.

🇿🇦 Did your SASSA applications get rejected. Make a SASSA Appeal.

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