P2P services

Paxful shutdown hits Nigeria harder than the rest of the world — Here’s why

Paxful’s shutdown has left its global community heartbroken, but it has significantly impacted the Nigerian community, where it pioneered P2P crypto use.

The shutdown of the peer-to-peer (P2P) cryptocurrency marketplace Paxful has left its worldwide community searching for alternatives, but it appears to have significantly affected the Nigerian crypto community. 

On April 4th, Paxful declared that it would halt its operations. The reason for this decision, according to the founder and CEO Ray Youssef’s blog, was due to “key staff departures” and the regulatory environment.

According to “The 2020 Geography of Cryptocurrency Report” by Chainalysis, Nigeria ranked eighth in crypto adoption and usage among 154 countries included in the study. Acceptance and usage of crypto in Nigeria were not as high until Paxful pioneered the use of peer-to-peer technology in the country, helping expand the crypto industry.

A Nigerian crypto user, Emmanuel Susegh, told Cointelegraph that the shutdown of Paxful feels like “the death of a loved one,” as the exchange helped him make his first $100,000. Susegh went on to say that Paxful was the go-to platform he used to trade gift cards from Amazon and Apple for Bitcoin as far back as 2015.

Another member of the Paxful Nigerian community, data analyst Obinna Uzoije, mentioned that in the early days of his career, he used Paxful to exchange the dollars he received from his employers as pay for Nigerian naira. At some point, freelancers in Nigeria who work for international companies were paid through Skrill, an online payment platform. Certain users on Paxful accepted the funds, so the freelancers could easily exchange it for Bitcoin or cash. Uzoije explained that this shutdown leaves a lot of other crypto enthusiasts in Nigeria wondering what the future holds for crypto marketplaces.

Related: Paxful to return lost Celsius funds to Earn users

Over-the-counter (OTC) vendor Akeem Abdullahi expressed that a generation of OTC vendors was created by Paxful’s escrow service. The vendors could buy gift cards from individuals who wanted to sell and were not literate enough to use the platform.

Some community members took to Twitter to express their worry about users getting their funds back. However, Youssef has assured users in a tweet that the Paxful team is working on clearing users’ send-outs.

Magazine: Journeys in Blockchain: Ray Youssef of Paxful

Nigerian crypto investors question central bank’s decision to flag P2P users

Crypto P2P users in Nigeria worry over using various platforms to transfer funds as the country’s central bank cracks down on bank accounts that received a share of Flutterwave’s rumored stolen funds.

Nigerian crypto investors using peer-to-peer (P2P) services have expressed concerns about the Central Bank of Nigeria flagging their bank accounts. CBN’s decision to flag accounts is believed to be in relation to the near $6.3 million (2.9 billion naira) Flutterwave hack, as the bank accounts have yet-to-be-proven affiliations with the hack.

According to local news sources, on Feb. 19, Albert Onimole, legal counsel for  Nigerian fintech company Flutterwave, reported to police in Yaba, Lagos, that almost $6.5 million (3 billion naira) had been illegally transferred from the accounts of his client.

On February 27th, a motion ex-parte was filed and granted in support of Flutterwave’s claims. According to the motion, 107 accounts, including their fifth beneficiaries, will be put on lien/Post-No-Debit (PND). So far, some of the locals have confirmed that their accounts have been frozen in connection to the hack.

The situation has gone on to discourage P2P users from interacting with the various over-the-counter (OTC) markets, which allow the trading of securities between two counterparties executed outside of formal exchanges and without the supervision of an exchange regulator. That’s because the hacked sum flowed into the Nigerian crypto market on different OTCs, and users now have problems with financial intermediaries when they want to use P2P services for crypto transfers.

Investors across the world use P2P as a medium of direct exchange of crypto between parties without the involvement of a central authority. They may choose to swap cryptocurrencies for cryptocurrencies or crypto for cash. In 2021, the CBN announced a regulation that prevented financial institutions like banks from enabling crypto use. However, Nigerians were able to find a way forward and still maintain their leading position as the largest crypto hub of Africa through the use of P2P platforms.

Some community members believe this could affect the general interest of Nigerians who are yet to get on board the crypto digital ecosystem in acquiring digital assets.

A concerned Nigerian stated that the situation is causing some businesses to crumble. This is because unsuspecting entrepreneurs have received payments for their services with funds that were allegedly linked to the hacked amount, resulting in confusion and possible legal repercussions.

Related: Binance recommends P2P as Ukraine suspends hryvnia use on crypto exchanges

Despite strict crypto regulations by the CBN, the P2P market has aided Nigerian trade. However, a financial analyst known as Sadeik calls it a black market hub for scammers laundering fraud funds. He went on to say that a friend of his lost more than 500,000 naira because the person he transacted with had his account flagged in the Flutterwave hack.

In an official statement, Flutterwave denied the hack, saying it identified an unusual trend of transactions on some users’ profiles and immediately launched a review in line with its standard operating procedure. The review purportedly revealed that some users who had not activated recommended security settings might have been susceptible to hacking. The statement added that Flutterwave was able to address the issue before any harm was done to its users.

Magazine: What really goes on at a crypto OTC desk?

Nigerian crypto investors question central bank’s decision to flag p2p users

Crypto P2P users in Nigeria worry over using various platforms to launder funds as the country’s central bank cracks down on bank accounts that receive a share of Flutterwave’s rumored stolen funds.

Nigerian crypto investors using peer-to-peer (P2P) services have expressed concerns about the Central Bank of Nigeria (CBN) flagging their bank accounts. CBN’s decision to flag accounts is believed to be in relation to the near $6.3 million (2.9 billion nairas) Flutterwave hack, as the bank accounts have yet-to-be-proven affiliations with the hack.

According to local news sources, on February 19, 2023, Albert Onimole, legal counsel for Flutterwave, a Nigerian fintech company, allegedly reported a case to the Deputy Commissioner of Police, in Yaba, Lagos, of almost $6.5 million (3 billion nairas) that had been illegally transferred from the accounts of his client.

On February 27th, a motion ex-parte was filed and granted in support of Flutterwave’s claims. According to the motion, 107 accounts, including their fifth beneficiaries, will be put on lien/Post-No-Debit (PND). So far, some of the locals have confirmed that their accounts have been frozen in connection to the hack.

The situation has gone on to discourage P2P users from interacting with the various over-the-counter (OTC) — markets that allow trading of securities between two counterparties executed outside of formal exchanges and without the supervision of an exchange regulator, as the hacked sum flowed into the Nigeria crypto market on different OTCs and users now have problems with financial intermediaries when they want to use P2P services for crypto transfe.

Investors across the world use P2P as a medium of direct exchange of crypto between parties without the involvement of a central authority. They may choose to swap cryptocurrencies for cryptocurrencies or crypto for cash. In 2021, the CBN announced a regulation that prevented financial institutions like banks from enabling crypto use. However, Nigerians were able to find a way forward and still maintain their leading position as the largest crypto hub of Africa through the use of P2P platforms.

Some community members believe this could affect the general interest of Nigerians who are yet to get on board the crypto digital ecosystem in acquiring digital assets.

A concerned Nigerian stated that the situation is causing some businesses to crumble. This is because unsuspecting entrepreneurs have received payments for their services with funds that were allegedly linked to the hacked amount, resulting in confusion and possible legal repercussions.

Related: Binance recommends P2P as Ukraine suspends hryvnia use on crypto exchanges

Despite strict crypto regulations by the CBN, the P2P market has aided Nigerian trade. However, a financial analyst known as Sadeik calls it a black market hub for scammers laundering fraud funds. Sadeik went on to say that a friend of his lost more than 500,000 because the person he transacted with had his account flagged in the Flutterwave hack.

In an official statement, Flutterwave denied the hack saying it identified an unusual trend of transactions on some users’ profiles and immediately launched a review in line with its standard operating procedure, which revealed that some users who had not activated some of our recommended security settings might have been susceptible. The statement adds that Flutterwave was able to address the issue before any harm was done to its users.

Magazine: What really goes on at a crypto OTC desk?

Tether, Bitfinex, Hypercore collab to launch encrypted P2P apps

The trio launched Holepunch with a vision to bestow control over data while breaking technology monopolies, among others.

Staying true to the “bear market is for building” motto, crypto exchange Bitfinex along with Tether (USDT) and Hypercore announced the launch of a fully encrypted platform, Holepunch, for building peer-to-peer applications. As part of the initiative, the trio launched Keet, an encrypted application capable of facilitating real-time audio and video calls, text chat and file sharing.

Partners aim to bestow control over data while breaking technology monopolies with Holepunch, according to the announcement. Tether and Bitfinex funded the development of the Holepunch platform. Paolo Ardoino, the chief technology officer of Tether and Bitfinex, will lead the new initiative as the chief strategy officer.

Speaking on behalf of Tether and Bitfinex, Ardoino highlighted the need to address the growing privacy concerns, stating:

“It [Tether and Bitfinex] believes that freedom of choice, communication and finances are the lifeblood of the future, and anything that will enhance those freedoms is worth amplifying.”

Holepunch currently operates as a closed source protocol in its alpha or pre-release phase, which will be moved to open source code by the end of 2022. In doing so, Holepunch will not use blockchain technology at its core and will instead move to an in-house payments API powered by the Lightning Network.

Developers building solutions on the Holepunch protocol will be able to use USDT as default for micropayments. However, the company is yet to disclose support for other cryptocurrencies and stablecoins.

Related: Web3 platforms launch the Open Metaverse Alliance

Blockchain-based metaverse and Web3 platforms joined hands to form Open Metaverse Alliance for Web3 (OMA3), an alliance built on four core principles — transparency, inclusiveness, decentralization and democratization.

As Cointelegraph reported, the alliance will focus its efforts on specific metaverse-related topics, which include setting standards for nonfungible tokens (NFTs), protocols, transferable identity, portals between virtual worlds, mapping and indexing.