As the American Chapter 11 bankruptcy filing of now-defunct crypto exchange FTX shows, its rapid implosion within a matter of days last week has wrought havoc in the Web3 world, especially in crypto-currency trading — and extended its fraudulent tentacles deep into many African jurisdictions.
As one would expect, the possibly $8 billion shortfall of the now-disgraced exchange — managed by Samuel Bankman-Fried and his up to 8 roommates from their penthouse condominium in Hong Kong, and later the Bahamas, apparently with zero adult oversight, despite billions in private-equity backing from allegedly ‘seasoned’ VC investors such as Ontario Teachers’ Pension Plan, Insight Partners, SoftBank’s Vision Fund 2, NEA, and Lightspeed — has affected not only the venture capitalist funders of FTX, but also countless of its depositors, with many of them possibly located on the African continent.
As Andreas Stargard, an attorney with Africa-focused litigation firm Primerio Ltd. notes, “FTX’s formal court filing that initiates the group’s bankruptcy proceedings in the United States actually contains an annex listing over 130 affiliated corporate entities, several of which are based in various African countries. While it is unclear how much business was transacted through some of these subsidiaries in Uganda, Kenya, Ghana, South Africa, Tanzania, Nigeria, the DR Congo, Egypt, the UAE, and possibly elsewhere, this implies that African users have been negatively impacted and damaged by SBF and his cohort’s blatant misconduct.”
- African FTX subsidiaries encompassed by U.S. Chapter 11 filing
FTX (together with its proprietary token, FTT, which is now all but worthless) is, of course, not the first crypto platform to go bust in an instant. Recent examples include the infamous Do Kwon’s TerraLuna debacle, the $400 million-oversubscribed Celsius crypto-lending nightmare, or the Quadriga ponzi scheme (of the undead?) in Canada. As a side note here: Martin Shkreli, the infamous “pharma bro” recently emerged from federal prison, gave Do Kwon some unsolicited and likely unwelcome ‘advice’ during an Up Only crypto circle-jerk video-chat session this week, when he called out the Luna founder who was also present and said: “I want to let you know, jail’s not that bad!” What a stunning fall from grace for the man and his company, who only recently inked a $135 million sponsorship deal with the Miami Heat, in addition to similar arrangements with Mercedes’ Formula 1 team (note: The officials down in Miami-Dade are already planning to “sue” FTX or whatever remains of the company’s ashes. Good luck with that, SoFlo guys…)
The same may be in store for Mr. Bankman-Fried, in short order. For now, we posit that African victims of FTX’s fraud should contact competent legal counsel to explore all options for recovery, even in the U.S. bankruptcy proceedings, in light of the listed African entities.
Anti-Fraud & Corruption Law in Africa 