Traders in Africa are less involved in illicit activities and are less subjected to crypto scams than any other region in the world.
Illicit Activity is Low in the Region
In its latest report of blockchain and cryptocurrency analytics firm Chainalysis entitled “2020 Geography of Cryptocurrency Report,” the firm says that illicit activity involving cryptocurrency is not very high in Africa as compared to other regions. From July 2019 to June 2020, only 2% of Africa’s $16 billion cryptocurrency trading volume has been used in illicit activities.
The report says that “Illicit activity makes up roughly 1.4% of all African cryptocurrency activity by volume, in terms of both sending and receiving, which is about average compared to all other regions.” However, people in Africa became victims of scams involving fiat scams such as pyramid schemes. According to Chainalysis’s report:
“Historically, people in many parts of Africa have fallen victim to financial scams common in the fiat world, such as pyramid schemes and other investment scams. Ray Youssef cited the resulting wariness of being scammed as an obstacle in pitching new African users on Paxful and cryptocurrency in general. Interestingly given that context, the data suggests that cryptocurrency scams aren’t as prevalent in Africa as they are in other regions.”
It does not mean that African traders are not victims of crypto scams at all but there is a significant amount of scams reported in the region. “While scams still make up a large portion of illicit cryptocurrency activity in Africa, the share isn’t as high as it is elsewhere,” the report adds.
Why Scams are less in Africa?
So, the big question here is why Africans are less subjected to crypto scams? The report, however, hints that there is greater awareness of such illicit activities in the region than others. So, Africans are very careful before investing in a product.
Crypto education is another reason behind the low rate of cryptocurrency scams. Tanya Knowles, the Binance’s manager in South Africa stated in March that it was very important to “ensure there is education around scams… we need to get the basics in place before we open it up and say, go wild and start trading.”