Crashing crypto exchange FTX reportedly used the lure of high profits to convince African college students to become its ambassadors. In addition to encouraging new FTX investors to use the platform, student ambassadors were also asked to teach them about crypto and blockchain. Some of the students insisted that they will not give up cryptocurrencies despite losing funds after the FTX collapse.
Recruited users informed of the benefits of using FTX
Crashed crypto exchange FTX reportedly used the promise of significant rewards to encourage African students to recruit new investors for its platform, according to a report. The report added that, in certain cases, students were told to ensure recruited investors deposited funds or traded on the platform.
In addition to encouraging new investors to use the platform, the students were also asked to educate them on crypto and blockchain technology. The students had to emphasize to their peers the benefits of using FTX. According to a Business Insider reportsuccessful students were told they could earn commissions of up to 40%.
However, according to report Per CNBC, many of the students who acted as brand ambassadors for FTX in Nigeria before it collapsed were unaware of the crypto exchange’s precarious financial position. Consequently, when the cryptocurrency exchange crashed in the last quarter of 2022, students were still actively recruiting and, like other FTX users, they also lost money.
Unsurprisingly, the collapse of the cryptocurrency exchange and the impact it has had on the broader cryptocurrency industry have amplified calls for stricter regulation of cryptocurrency entities. In Africa, regulators like the central bank of Rwanda have used the FTX collapse to highlight the dangers of trading cryptocurrencies.
‘Too big to fail’
Yet despite the threat of tighter regulation, as well as the public’s now dimmed view of the crypto industry, some of the students quoted in the report said they were undaunted. One of the students, Imran Yahya, an FTX ambassador at Bayero University in Nigeria, said the collapse of the crypto exchange only proved that “no company is too big to fail.” However, rather than abandon cryptocurrencies, Yahya said that he planned to be more careful this time.
Fortunate Atueyi, FTX ambassador at the University of Nigeria, said he too will be more careful and not trust too much in the future.
“In a way I trusted them. I thought, I was part of the people saying that FTX is too big to fail. I don’t think it’s wise to leave your money there, and they have complete control over your money. So they are just like any bank,” Atueyi said.
Another student, Gabriel Trompiz, argued that while centralized exchanges like FTX have proven useful in driving the cryptocurrency adoption agenda, relying on them “is like contradicting yourself.” Therefore, to ensure that he does not lose again in the future, Trompiz said that he will prioritize investing in decentralized finance (defi) platforms.
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