It would appear so much focus has centred on Golix in the past few weeks.
Well, the history of cryptocurrencies in Zimbabwe will be incomplete without the mention of Harare-based exchange, a pioneer in that area.
With trades of more than $20 million in the last three years and about 50 000 Zimbabweans trading in crypto on the platform — before it was forced to shut down — Golix is easily the biggest digital currency exchange in the country.
So, you may wonder why we seem to have started off on the defensive.
That’s because we are keen to illustrate the centrality of Golix to the unfolding drama in Zimbabwe’s crypto soap opera.
Golix can be thought of as Zimbabwe’s Huobi — the big Chinese exchange, which, fleeing persecution by regulators at home, relocated to Japan . . . and continued to flourish.
The Harare trading platform has shrugged off a ban on cryptocurrencies by the Reserve Bank of Zimbabwe — a ban that has since been temporarily halted by the High Court — to migrate to South Africa, Uganda and Kenya in the last week.
Golix has also resumed its $32 million token sale, which was suspended at the height of the RBZ clampdown around mid-May.
It remains as yet unclear whether Golix established a physical presence in the three countries. Or whether it will move its headquarters from Harare, even though it said in May an office was to be opened in South Africa in June.
Low volumes, dumb decision
Now, Golix has started to process volumes once again, but very insignificant ones.
Early morning on Wednesday, there was only about 0,01 Litecoin traded on the South African platform, with no trades at all on the Ugandan and Kenyan exchanges, according to data on Golix’s website.
These things tend to take off slowly, but the expansion into Africa suggests Golix to have reached some agreement with financial institutions in those countries — a relationship they no longer enjoy with Zimbabwean banks.
Researchers say South Africa and Kenya are the second and fourth largest virtual currency markets in Africa, respectively, with Uganda somewhere in the top 10.
Doors apparently shut in Zimbabwe, it makes some sense to look elsewhere for growth, even when such actions betray underlying bitterness.
But it doesn’t look like the decision to proceed with the $32 million Initial Coin Offering without tiding up the chaos in Harare, Golix’s major market, was a smart one.
Golix is virtually at war with its customers, who are keen to take out the hundreds of thousands of dollars (of both fiat and crypto) locked up at the exchange since the RBZ ban on May 15.
At the order of the Reserve Bank, Zimbabwean commercial banks cut ties with the exchange, leaving crypto investors on Golix in the ditch.
Perhaps what has infuriated investors most are virtual currency withdrawals.
On paper, this would have been the easiest thing to do because Golix keeps the coins in their hot wallet — a kind of live online purse that allows for instant cryptocurrency transfers.
The exchange has admitted guilt, blaming the failure on technical issues.
It said earlier this week that it had started processing cryptocurrency withdrawals, but investors aren’t entirely pleased.
We could not immediately ascertain the amount of money, in crypto, to have been paid back to investors so far.
Some now believe Golix just doesn’t have the money to settle, which explains the redirection of focus onto the token sale – a mere fund raiser to pay off outstanding debts, they allege.
But there is no evidence to support these claims.
Fiat withdrawals are likely to take longer though.
Golix has requested its clients to complete a survey on whether they would like to be paid through some prepaid debit card, instead of the traditional cash transfers into their bank accounts or Ecocash wallets.
This essentially adds to the confusion and investor frustration, because we really don’t understand why Golix’s banking partners, given a 60-day window to comply with the RBZ directive, would fail to release the funds before the window expires.
And then stop all crypto services thereafter.
RBZ no show baffles
It may be that the central bank, despite making a public announcement of the two month grade period, privately directed commercial banks to act immediately.
There is some credence to this theory, as lended by the Reserve Bank of Zimbabwe’s failure to defend the digital currency ban in court, when Golix challenged it to do so two weeks back.
“It is not clear why RBZ did not appear in court to defend the ban. However, the silence since the overturn of the ban should worry all interested parties,” Prosper Mwedzi, a Zimbabwean lawyer based in England, told Business Weekly, in an interview.
“A default judgement means that cryptocurrencies are still in the grey area as was the case prior to the ban. The worrying part is that silence could mean that the RBZ might be setting in motion the process for a ban which could be lawful if procedures are followed,” said Mwedzi, also founder of the tourism-based cryptocurrency Victoria Falls Coin.
The lawyer, who helped with the Golix case, added: “All that is required is legislation from Parliament in order to make a ban which can pass the test for lawfulness. Such a ban could be difficult to overturn.”
In the Initial Coin Offering, more than 1,274 billion Golix tokens are on offer, but only half will be sold to the public at $0,05612 each.
The rest are to be shared between the owners of Golix (15 percent), their staff (25 percent), and to cover costs of marketing the intended projects (10 percent).
Whatever happens from now onwards, the stage for a Zimbabwean financial soap opera is grudgingly set.