Africa's Crypto Craze: Transactions Hit $20 Billion a month, now scammers take advantage

Anna Collard

Africa has a strong cryptocurrency fanbase, which makes it even more critical that users remain aware of crypto scams and risks

Cryptocurrency has become incredibly popular in Africa. According to the International Monetary Fund, the crypto market is showing the most rapid growth, with transactions hitting $20 billion a month as of 2021. Its intense popularity as an alternative route to financial stability, investments and payments has also led to a radical increase in the threats with crypto scammers and fraudsters using every vulnerability as an opportunity. According to Anna Collard, SVP Content Strategy & Evangelist at KnowBe4 Africa, it is critical that there be more awareness around the risks of cryptocurrencies, so people gain a deeper understanding of the dangers and the scams within the ecosystem.

“The reliance of Africans on social media to make informed choices around investments into cryptocurrency or NFT (non-fungible tokens) projects calls for tighter regulation of influencers,” she adds. “Well known celebrities are being used to promote crypto scams and to drive widespread adoption in Africa as evidenced by recent court cases against Kim Kardashian and Floyd Mayweather. This, when coupled with increased interest and adoption in Africa, is making people vulnerable targets.”

To gain a richer understanding of the cryptocurrency space and the risks facing users, KnowBe4 polled 800 adults in Mauritius, Botswana, South Africa and Kenya. The survey found that the majority of respondents (81%) knew what cryptocurrency was with 52% having already invested into it. Only a small percentage (4%) did not know what it was, and 27% had not tried investing into it. For most, the primary goal for their investment was long-term profit (69%) followed by quick profit (39%). Interestingly, 18% opted into cryptocurrency because they did not want to be tied to local banks and 16% wanted to benefit from next-generation trading and transactions.

“Among those who have invested into cryptocurrency, most (47%) opted into using a broker and exchange platform that had been recommended to them,” says Collard. “This ties in with the trend to rely on word of mouth and hearsay when investing into cryptocurrency solutions and underscores the importance of more regulation and awareness around which platforms are trusted sources of cryptocurrency investment and financial management, and which are not.”

In addition, people would use a broker and exchange platform because they had read about it in articles or via advertising, 38% chose their platform based on influencers and social media promotions, and 33% found them through an online search.

“What is concerning is that the research also found that as many as 36% of respondents had fallen prey to a crypto scam, with nearly 60% saying that they knew someone who had been a victim of such a scam,” says Collard. “The most common scam is being tricked into investing through a broker or a platform that is not legitimate. This really does drive home the need for more visibility and transparency in this space.”

In addition to those who were tricked into investing into a fake platform or broker, 42% were scammed into sending currency to a compromised wallet or directly to a scammer, 22% had invested via a bogus app, and 13% had been tricked into sharing their private keys. Most lost under USD500 to the scammers, but 14% had lost over USD500. In spite of these risks, most of those who had been scammed would invest into crypto again, with only 10% saying that they would never do it again.

“The survey also looked at NFT projects and found that more than 50% of respondents were aware of them, but that most were still not clear how they worked or what they were,” concludes Collard. “There is a definite shift towards these, though, with nearly 25% planning on investing into NFTs in the future.”

For those on the continent keen to get to grips with NFTs and cryptocurrencies without compromising funds and identities, it is important to dig into the data and ensure that every investment is with a reputable platform and broker, and to research thoroughly at every turn. This is the only way to ensure that people benefit from the potential of crypto and NFTs instead of falling victim to the risks and the scams.

The full report with the results from this survey can be read here.