FTX Bankruptcy: Two Ghanaian financial outfits fingered

Information reaching Techgh24 indicates that two regulated financial institutions in Ghana were deeply involved in facilitating crypto trade on behalf of FTX before the collapse of crypto exchange giant.

This is in spite of a January 2018 directive by the Bank of Ghana, which has been repeated several times, that no regulated financial institution should get involved in crypto transactions in any form or facilitate same.

Here is the exact directive – The Bank of Ghana further directs all licensed institutions including banks, specialized deposit-taking institutions, dedicated electronic money issuers and payment service providers to refrain from facilitating cryptocurrency transactions via their platforms or agent outlets.

While we withhold the names of the two institutions for now, we are reliably informed by some crypto traders that all their mobile money transfers meant for cryptocurrency on the FTX platform went through one of the leading regulated fintech firms in the country, and all payments terminated in accounts held by another regulated financial institution in the country.

The FTX Africa team were actually in the process of getting a third regulated financial institution (one of the big banks) involved in the whole deal but that did not happen before FTX went bankrupt.

FTX collapsed mainly because another crypto exchange giant, Binance pulled out its billions of dollars from that platform citing long-standing liquidity problems at FTX. Once Binance was out, it spiralled a storm of withdrawals, leading to the eventual collapse of FTX.

In what seem to be a confirmation of the liquidity problems Binance mentioned, FTX had in the past one year or so, turned to Africa, arguably to raise some easy funds to shore up its liquidity.

Crypto Summit

In October this year, the FTX Africa team held a summit in Accra and declared that transaction value in Ghana alone is over US$200 million, while that of Nigeria was over US$500 million. Meanwhile, FTX also had a license in South Africa, which was only revoked recently, following the collapse of the company.

The FTX Africa team had tried to use their claim of huge transaction value in Ghana and Nigeria to convince some financial institutions to get on board, but that was not meant to be.

Trader Confession

Meanwhile, one trader told Techgh24 that he has traded over GHS70 million (US$4.3 million) worth of crypto on the FTX platform and all the mobile money payments in that regard, were made through the said local regulated fintech (name withheld for now) and the funds were lodged in accounts of the other regulated entity.

According to the trader, his personal money (thousands of dollars) got stacked in the whole mess and he is now too embarrassed to face the many Ghanaian investors he convinced to put their money into crypto via FTX.

Alarm Bells

The trader is however sounding the alarm that the funds are still sitting in the account of the said financial institution and the FTX Africa team are said to be planning to invest the money into real estate and other stuff, arguably to maintain the value of the money against inflation and other shocks.

Techgh24 has cause to believe that the central bank, which has keenly been monitoring all cryptocurrency activities in the country, is very much aware of this matter and the involvement of those two regulated institutions.

What is however not clear is whether the central bank has been able to determine the extent of their involvement; whether they benefitted unfairly to the detriment of customers or they themselves were victims.

Silent Response

Meanwhile, Techgh24 has sent requests to both regulated institutions but none of them has bothered to respond to our requests for explanation, in spite of several reminders. One promised to get back to us but never did. The other is just dead silent.

But soon, the traders will go public and mention names so that the institutions and persons involved will be given the opportunity to answer questions about their role, particularly within the context of a directive to all regulated institutions never to get involved in crypto transactions of any form.

Source: newsghana.com.gh