- Sam Bankman-Fried's failed crypto exchange, FTX, sent his coin, FTT, into dust and many people lost fortunes
- Earlier in the year, LUNA's crash created a shocking fall in price that sent shivers down the spines of many investors
- Three Nigerians, Waliu, Precious, and Aanu, who spoke to Legit.ng narrated how their money went down the drain
The year 2022 may be drawing to a close but the memories of pain it caused many in the crypto industry will linger for years to come.
An industry still fighting for mainstream adoption suffered two different blows when LUNA, a much-respected coin owned by Do Kwon, crashed, wiping out millions of dollars.
Just a few months down the line, as the industry was still gasping for air, another disaster came in with the crash of Sam Bankman-Fried's FTX, the second biggest exchange, only to Binance.
How did LUNA crash?
According to Forbes, Terra, the company that owns LUNA, created a stable digital currency, UST, and that was when their problem started. In the crypto space, 1 stable coin equates a dollar, but disaster knocked Terra when it could not maintain that for its UST.
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As a result, the price of everything, most especially LUNA came crashing down. From over $100, the market crashed more than 90% down afterwards.
FTT affected by FTX crash
FTX, one of the biggest exchanges in the world, failed when it was discovered that the company might have invested users' fund when it earlier told customers it would not.
While there are many accounts of what happened, the end came when CoinDesk picked a hole in the operations of the exchange, saying that the value of the exchange was backed by its token FTT, instead of stable coins (dollars). CoinMarketCap price chart shows the crisis sent LUNA from above $80 to less than $2 in days. The fall was epic.
In all the stats for both FTT-FTX and LUNA burndown were three Nigerians who lost fortunes that may never be recovered.
I initially deposited $80,000 (N62,224,000) on LUNA network
Speaking with Legit.ng's Joseph Omotayo, a seasoned investor, Aanuoluwapo Ajuwon, revealed how both crashes affected him. He said that before the crash, he invested in LUNA's stable coin that promised 16-17% annual interest in March. He did the investment in the trenches of $50,000 (N38,889,000) and $30,000 (N23,344,000), respectively.
Going by his instinct, he made a withdrawal of $50,000 (N38,89,000) in May. Days after, a crisis hit LUNA and he withdrew the rest. Though he lost some of his profits, he was able to break even. With his major investment out, he tried to take advantage of the fall as he started buying LUNA at lower prices on Binance exchange. That never went well.
"I was thinking I had bought the bottom.... For a coin to drop from over $100 to around two cents. I invested around $400 (N311,120)with cost-averaging..."
He admitted that human psychology affected him as he thought he might make generational wealth out of it all. Though he had the opportunity to get out, greed played out.
For FTT crash, his method to buy the lowest (dip) price also got him burnt. All his efforts to get out made him lose $1,100 (N855,580).
FTT crash swept all my over $13,000 (N10,111,400)
Another seasoned trader and owner of Lasunpresh Solutions, Precious, said that for LUNA, his exposure was minimal compared to FTX crash. His loss on LUNA could have been more if he had tried to buy more.
"For LUNA, my investment was between $500 and $1000. I was not following the news, things were already going down before I got to know about it..."
He stated that his exposure to FTX was diversified as he used the platform for both forex and futures trading. According to Precious, his futures balance was over $11,000 (N8,555,800).
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His other assets had nothing less than $3,000 (N2,333,400). Precious said that the loss got to that extent because he usually does not withdraw his profits off the exchange.
When Precious paid attention to the crash, withdrawal had become hard and he could not retrieve his funds till things fell apart for the exchange. On what gave him a relative assurance during the burndown, he said:
"...because I knew two of the stakeholders in Nigeria who were traders and influences. I believe some had contacts with SBF and his team. So, I felt confident... they kept assuring..."
Least exposure, less loss
Out of the Nigerians that talked to Legit.ng, Waliu, had the least exposure. The crash of LUNA, where he invested over $120 (N93,336), taught him a hard lesson. When FTT crash came, he stayed out. He, however, said that if he had spare funds during the FTT meltdown, he may have been tempted to buy the dip.
Nigerian man becomes millionaire from crypto
Meanwhile, Legit.ng earlier reported that a young Nigerian man identified as Crypto Lord in a TikTok video showed the big mansion of apartments he built from trading crypto.
ln the clip shared by @greybtcdaily, the man took the interviewer around the house that is close to completion.
When asked how much he started his trading career with, he said $0. To explain how that happened, he revealed that he got free dollars from participating in airdrops and that started as his capital.