The shutdown of Paxful, one of the largest cryptocurrency peer-to-peer exchanges, has made many Nigerians unsure of their future as crypto currency investors. They reason that if one of the most trusted platforms can fail, any other can, without recourse.
Paxful announced last week through a statement made public by Ray Youssef, its CEO, that the company has suspended its operation indefinitely due to regulatory issues and resignation of key workers.
Youssef, in an interview with Business Africa Insider in 2022, said Nigeria was the firm’s largest market, with 1.5 million users and a volume of over $1.5 billion since 2015.
A report released by Finders on cryptocurrency ownership and adoption in October shows that Nigeria has the second highest number of bitcoin owners at 48 percent, up from 16.1 percent in 2021. The data show that Australia is the highest, with 61 percent of crypto owners holding bitcoin, the world’s most popular cryptocurrency.
In 2022, Africa’s biggest economy emerged as the most crypto-obsessed nation in the world, based on the number of people searching for crypto-related words on the internet, according to Coingecko, a cryptocurrency price tracker.
However, crypto investors and analysts who spoke with BusinessDay said that the shutdown of Paxful will affect Nigerian users, despite the alternative provided by the company as it was one of Nigerians’ favourite platforms adopted because of its security and user-friendliness.
The experts also said that many Nigerians may start losing interest in most of the crypto platforms following frequent shutdown cases and the nature of the crypto market over a year now.
“Paxful shutting down is worrisome. It is an easy-go platform for Nigerian crypto traders where they carry out their peer-to-peer transaction. It will have a very negative effect on Nigerian crypto traders including me because that’s where the majority of us transact. There is a strong bond between Nigerian youths and Paxful,” Raphael Idu, a crypto trader, said.
“Ray Yousef, the CEO of Paxful, gave us alternatives where we can move in by introducing us to a platform called Noones, but we are already used to Paxful and can’t have such trust again. The trust is gone but I like the fact that they provided an alternative where we can switch.”
According to Idu, regulatory issues have always been a major challenge limiting the chances of the crypto market. He added that the recent shutdown of Paxful and other crypto platforms as a result of regulatory issues may also give the Nigerian government more reasons to restrict the activities of crypto in Nigerian market without further consideration.
Dozie Ulor, a crypto investor who traded with Paxful, said the collapse of crypto trading platforms will reduce the trust and interest of many Nigerians involved in cryptocurrency generally.
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He said: “Last year, it was FTX and now Paxful. All these are giant crypto platforms that have a strong presence in Nigeria. Once trust is broken, people will start losing interest because you don’t know the next platform to shut down, which may take all your earnings.
“I noticed that such was going to happen earlier and posted it on my wall because, lately people started complaining about Paxful and anybody grounded with cryptocurrency will also observe that. Paxful is user-friendly and many people prefer it to other platforms so it will affect Nigerian users much because they will find it difficult to adapt to another platform.”
For Clinton Nduka, a crypto expert, many Nigerians will be forced to push their investment in crypto into other businesses. He expressed doubts about the alternative provided by Paxful, saying it may not be guaranteed.
“Many crypto traders will be forced to put their investment in other businesses. The alternative replacement for Paxful cannot be the same as Paxful. It is disappointing that the major crypto trading platforms are collapsing gradually. If this continues, many Nigerians that cannot afford to risk their investment will pull off from the crypto market,” Nduka said.
