Prosperity for the continent was a key component of the crypto promise for Africa. That assurance was kept. The peer-to-peer lending marketplace Paxful asserted that its research revealed that by 2021, Africa was leading “global cryptocurrency adoption.”
During this time, Africa was often regarded as the “next frontier” of cryptocurrency. Many investors rushed to ride this wave, attracted by the promise that Bitcoin, Web3, and NFTs held for the continent.
Global VC funding for cryptocurrencies reached a height of $12.3 billion as of Q1 2022, according to data from Pitchbook. This reality has, however, soon shifted. Due to the difficulty in obtaining capital, the 2022 bear market hit cryptocurrency particularly hard.
In Q1 this year, VCs slashed funding by 80% to $2.4 billion, and the axe didn’t spare African startups.
As a result, this challenging climate began driving away cryptocurrency startups. The first two crypto lenders to fail were Celsius and Voyager, and the collapse of FTX dominated media discussions.
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Unfortunately, this domino effect also affects cryptocurrency firms with a focus on Africa.
It should be noted that this is not the first time crypto companies have closed in Africa. As an illustration, the Reserve Bank of Zimbabwe ordered Golix, a cryptocurrency exchange with operations in Zimbabwe, to cease operations in 2018.
Additionally, the South African cryptocurrency exchange iCE3X closed in 2021 owing to “liquidity issues”.
Here is a list of the most well-known crypto businesses with an emphasis on Africa that have folded as a result of the bear market.
Paxful
Paxful, a worldwide Bitcoin marketplace with deep roots in Africa, announced its closure earlier this month after seven years in business. The decision to close the business was made essential since no engineers, members of the compliance team, or security staff remained, according to Ray Youssef, CEO of Paxful.
In addition, he wrote on his blog that “regulatory challenges for the industry continue to grow, especially in the peer-to-peer market and most heavily in the US.” Nigeria, Cameroon, and Kenya were its three largest markets before its closure.
Lazerpay
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.
LocalBitcoins
LocalBitcoins, one of the longest-running Bitcoin exchanges, announced its shutdown in February, citing the “ongoing very cold crypto winter.”
The bear market caused the ten-year-old exchange to start recording extremely low trade volumes. Before it was taken down, LocalBitcoins had weekly trading volumes that ranged from $5 million to $7 million over the previous four months.
According to data from CoinDance, it was a long cry from 2017, when it soared to above $100 million in back-to-back weeks.
Due to its pioneering position, the Helsinki-based corporation had a significant presence in Africa at its height. Years before the debut of Binance and Coinbase, it was already operational.
Localcryptos
Peer-to-peer cryptocurrency exchange LocalCryptos announced that it would shut down in October 2022 as part of a celebration of its fifth birthday.
The company announced its closure and cited the state of the market and regulatory uncertainties as justifications.
Innovating a non-custodial web-based wallet for P2P cryptocurrency trading, LocalCryptos, which first debuted as LocalEthereum in 2017, quickly garnered popularity.
