The craze for this alternative payment method is attracting a lot of interest on the continent. We bring you a closer look at the pioneers of African cryptocurrencies.
The Central African Republic has suddenly put the continent in the spotlight, in April becoming the first African country (second in the world after El Salvador) to offer legal tender to cryptocurrencies on its territory, before launching its own digital currency, Sango Coin. Analysts and commentators have questioned the relevance of this choice in a country where only a tiny fraction (11%) of the population has access to the internet, especially at a time when the price of cryptocurrencies – particularly Bitcoin – is plummeting.
Nevertheless, CAR President Faustin-Archange Touadéra and his advisors have, with this decision, however controversial, confirmed a trend that has been underway for several years: the very strong interest of Africans in cryptocurrencies. Emancipated from the monetary system run by central banks, which they were built to oppose, these digital currencies are attractive in Africa.
And this is not surprising, keeping in mind that on the continent, especially in countries using the CFA franc, that currency is a highly divisive issue and the traditional financial system has failed to earn the population’s confidence. According to the Global Crypto Adoption Index, in 2021, six African economies – Kenya (5th), Nigeria (6th), Togo (9th), South Africa (16th), Ghana (17th) and Tanzania (19th) – were among the top 20 countries in the world with the highest levels of cryptocurrency adoption.
It’s hard for financial market regulators to take action [against cryptocurrency companies] because they do not exist under the law
Binance, the world’s largest cryptocurrency trading platform, has understood the African potential. After opening up to several of the continent’s currencies, including the CFA franc, and launching a subsidiary in Uganda, the group created in 2017 also became, in early 2022, one of the sponsors of the African Cup of Nations, the continent’s biggest sporting event, which attracted more than 300 million viewers – or as many potential users. And to ensure his presence on the continent, Binance’s boss, Chinese-Canadian Changpeng Zhao, made his first trip there in early July, travelling successively to Côte d’Ivoire, Senegal and Morocco.
Rise of unscrupulous companies
However, in the absence of clear and strict regulations, this African craze for cryptocurrencies has also encouraged the rise of unscrupulous companies specialising in all kinds of scams.
For example, some 300,000 people have fallen victim to Liyeplimal (“poverty is over” in the Cameroonian Bassa language) and Global Investment Trading SA, cryptocurrency companies founded by Emile Parfait Simb.
As recently revealed by us, the 39-year-old Cameroonian, a former computer teacher now on the run, is sought by authorities for having stolen several billion CFA francs from his clients through a Ponzi scheme. In this well-known financial crime scheme, he promised investors large profits (400% per year) by playing on the foreign exchange market, and the money collected was used to pay interest. On 5 July, a group of about one hundred subscribers hailing from fifteen different countries and estimating their losses at 5.2bn CFA francs (€7.94 million), filed a complaint with the Paris public prosecutor’s office.
“In countries that have not regulated the use of cryptocurrencies, particularly in terms of the fight against money laundering, it’s hard for financial market regulators to take action because these companies do not exist under the law,” says Yoann Lhonneur, associate director of Devlhon Consulting, a firm specialised in finance.
In the DRC, tens of thousands of Congolese have suffered the same fate as the clients of Liyeplimal and Global Investment Trading SA.
Here, the nightmare is called MyGoldRev, an American pseudo-investment company run by a certain Connor Robert and promoted in the country by Serge Kasanda Ntumba, who has been sought by Kinshasa-Matete’s public prosecutor for more than a year. Through videos on social networks and fake promotional events on the streets of Kinshasa, MyGoldRev promised its clients they were investing in gold through a cryptocurrency wallet.
With a minimum investment of $20 and orders placed simply on WhatsApp or Telegram, the company promised daily returns of between 2% and 3.5%.
Investors did not need to “learn the strategies and principles of online investing”, said a form – still available on the internet – provided by the company.
While the total amount embezzled by the alleged scammer is not known, some of the victims claim to have lost more than $2,000. The company’s offices in Kinshasa were sealed off in October 2020.
A $3.6bn scam
These two cases are not the biggest cryptocurrency scams the continent has seen. The Cajee brothers, South African nationals barely out of their teens, are suspected of stealing $3.6bn from investors who wanted to buy Bitcoin.
In April 2021, when the price of the digital currency exceeded $60,000 (it peaked in November of that year at $68,991), the youngest, Ameer, now 19, sent an email to subscribers of Africrypt, his buying platform, informing them that it had been hacked. The young man asked subscribers to keep quiet while the funds were recovered. All the customers’ accounts were quickly frozen and the two brothers disappeared without leaving any forwarding address. Through their lawyer, they deny having fled with the funds, claiming that their platform was hacked.
A mysterious Dubai-based company, Pennython Project Management, whose shareholders are not known, has since partially compensated some Africrypt users, indicating that they are interested in the technology developed by the two Cajee brothers. In early January, the South African authorities nevertheless opened an investigation following a complaint lodged by a group of victims against the two young entrepreneurs, who claim through their lawyer to have left their country due to numerous death threats. No one has officially traced them to date.
Lobbyists at work
Beyond the shady cryptocurrency companies, there are many influencers and lobbyists involved in spreading the technology to African leaders and trying to influence future regulations. Among them is Frenchman Sébastien Gouspillou, a resident of Nantes, one of the most active influencers who presents himself as the champion of an ecological transition financed by Bitcoin.
His idea was to buy the surplus electricity produced by hydroelectric or geothermal companies in developing countries in order to finance a network of servers capable of “mining Bitcoin”, i.e. verifying and managing thousands of encrypted transactions per month.
Lagarde criticising crypto is like the CEO of Wells Fargo criticising the car
As well as bringing new revenue to local companies, this computing capacity is then sold on to wealthy clients looking for bitcoin income. BigBlock Datacenter, the company Gouspillou founded and chairs, has “mining farms” in Russia, Kazakhstan, and also in Kenya, where it has signed a contract with the national company KenGen.
The same goes for Virunga Energies, in the North Kivu region of the DRC, a country where the government is recalcitrant in terms of bitcoin. “There is a consensus at the level of the finance ministry and the Central Bank: be careful,” says a Congolese ministerial adviser.
In discussion with the Gabonese authorities, Gouspillou, for his part, is not evolving in the regulatory blur of cryptocurrency investment platforms. But is his model viable? The 52-year-old entrepreneur, who moved his company to Switzerland to raise funds there, claims, in any case, to have already raised €5m in venture capital in a round of financing that he hopes to close at €15m in total.
As an extension of his ecological and pro-development rhetoric, the man who claims to trade with some fifteen countries regularly fires off scathing criticisms of the IMF, World Bank and central banks during interviews or posts published on social networks.
“[Christine] Lagarde criticising crypto is like the CEO of Wells Fargo criticising the car. The ECB’s [European Central Bank’s] balance sheet is catastrophic and Madame Lagarde has no business venting about cryptos of no interest. She’s pulled the wool over your eyes and it seems to be working,” he recently raged on LinkedIn, referring to recent criticism from the ECB president.
Central African mission
Gouspillou’s argument seems to have won over some parts of Africa’s ruling class. The French bitcoiner has thus managed to convince the Central African government, the latter of which was already open to the subject, thanks in particular to the lobbying work by the controversial Émile Parfait Simb and the insistence of Pascal Bida Koyagbélé, minister and counsellor to President Touadéra, and of the Russian deputy minister of foreign affairs, Mikhaïl Bogdanov.
A fervent defender of cryptocurrency in his country, Bogdanov went so far as to personally approach Nigerian start-up Mara to ask for advice from its founder, Chi Nnadi.
It was through French socialist former deputy Jean-Marie Cambacérès that Gouspillou managed to meet the Central African president in May. And it was Alfred Tainga Poloko, president of the CAR’s economic and social council, who organised the meeting. Gouspillou led a mission resulting in a list of recommendations for the legalisation of cryptocurrencies in the country. He says he performed this service for free in order to preserve his company’s reputation.
Accompanying Sebastien Gouspillou – who chose not to respond to Jeune Afrique’s requests for comment – on the Central African mission were Nicolas Burtey and Noor Elbawab, founders of Galoy, a start-up developing a wallet and payment solutions via bitcoin. Influencer Richard Détente, who runs a channel dedicated to cryptocurrency on YouTube, was present, as well as Samson Mow, Canadian entrepreneur and architect of the Salvadoran bitcoin bond issue.
Jean-Christophe Busnel, the organiser of the Surfin’Bitcoin conference, was also on the trip, as was David Oren, founder of Solarly, a Belgian start-up that installs solar stations in Africa. This group of friends also carried out – again at their own expense – advisory missions for the Salvadoran president, Nayib Bukele, while developing, with varying degrees of success, their own businesses.
The Africa Report