The collapsed 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 required to teach them about crypto and blockchain. Some of the students insisted that they would never stop doing crypto, despite the loss of funds following the collapse of the FTX.
recruited users were explained the benefits of using FTX
The collapsed crypto exchange FTX reportedly used the promise of significant rewards to encourage African students to recruit new investors to its platform. The report added that in certain cases, students were told to make sure that the investors they recruited either deposited funds or traded on the platform.
In addition to encouraging new investors to use the platform, students were required to educate them about crypto and blockchain technology. Students had to emphasize to their peers the benefits of using FTX. Business Insiderreportsthat successful students were told they could earn as much as 40% commission.
However, according to areport by CNBC, many of the students who served as brand ambassadors for FTX in Nigeria before its collapse were unaware of the precarious financial situation of the crypto exchange. As a result, when the crypto exchange collapsed in the last quarter of 2022, students were still actively recruiting and like other FTX users, they lost money.
As expected, the collapse of crypto exchanges and its impact on the broader crypto industry amplified calls for stricter regulation of crypto entities. In Africa, regulators such as the Central Bank of Rwanda used the FTX collapse to highlight the dangers of crypto trading.
“Too big to fail”
But despite the threat of tougher regulation as well as the public’s current dim view of the crypto industry, some of the students cited in the report said they are undeterred. One of the students, Imran Yahya, an ambassador for the FTX at Baero University in Nigeria, said the collapse of crypto exchanges has only proven that “no company is too big to fail.” But instead of quitting crypto, Yahya reportedly plans to be more cautious this time around.
Fortunate Atueyi, an ambassador for FTX at the University of Nigeria, said he too will be more careful and not overly trusting in the future.
“I sort of trusted them. I was kind of part of the people saying FTX is too big and will fail. I think it is not wise to leave your money there, like they have full control over your money. So it’s like any other bank,” Atueyi said.
Another student, Gabriel Trompiz, argued that centralized exchanges like FTX have proven useful in driving the crypto adoption agenda, but relying on them is “like contradicting yourself.” Therefore, in order to avoid losing money again in the future, Trompiz said he would prioritize investing in decentralized financial (defi) platforms.
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