africa

Twitter CEOs weak argument why investors shouldnt fire him

March 5, 2020 by Blockchain Consultants

Twitter CEO Jack Dorsey might not spend six months a year in Africa, claims the real product development is under the hood, and gives an excuse for deleting Vine before it could become TikTok. Today he tweeted, via Twitter’s investor relations account, a multi-pronged defense of his leadership and the company’s progress.

The proclamations come as notorious activist investor Elliott Management prepares to pressure Twitter into a slew of reforms, potentially including replacing Dorsey with a new CEO, Bloomberg reported last week. Sources confirmed to TechCrunch that Elliott has taken a 4% to 5% stake in Twitter. Elliott has previously bullied eBay, AT&T, and other major corporations into making changes and triggered CEO departures.

…Focusing on one job and increasing accountability has made a huge difference for us. One of our core jobs is to keep people informed. We want to be a service that people turn to… to see what’s happening, to be a credible source that people learn from.

— Twitter Investor Relations (@TwitterIR) March 5, 2020

Specifically, Elliott is seeking change because of Twitter’s weak market performance, which as of last month had fallen 6.2% since July 2015 while Facebook had grown 121%. The corporate raider reportedly takes issue with Dorsey also running fintech giant Square, and having planned to spend up to six months a year in Africa. Dorsey tweeted that “Africa will define the future (especially the bitcoin one!)”, despite cryptocurrency having little to do with Twitter.

Rapid executive turnover is another sore spot. Finally, Twitter is seen as moving glacially slow on product development, with little about its core service changing in the past five years beyond a move from 140 to 280 characters per tweet. Competing social apps like Facebook and Snapchat have made landmark acquisitions and launched significant new products like Marketplace, Stories, and Discover.

Dorsey spoke today at the Morgan Stanley investor conference, though apparently didn’t field questions about Elliott’s incursion. The CEO did take to his platform to lay out an argument for why Twitter is doing better than it looks, though without mentioning the activist investor directly. That type of response without mentioning to whom it’s directed, is popularly known as a subtweet. Here’s what he outlined:

On democracy: Twitter has prioritized healthy conversation and now “the #1 initiative is the integrity of the conversation around the elections” around the world, which it’s learning from. It’s now using humans and machine learning to weed out misinformation, yet Twitter still hasn’t rolled out labels on false news despite Facebook launching them in late 2016.

On revenue: Twitter expects to complete a rebuild of its core ad server in the first half of 2020, and it’s improving the experience of mobile app install ads so it can court more performance ad dollars. This comes seven years late to Facebook’s big push around app install ads.

On shutting down products: Dorsey claims that “5 years ago we had to do a really hard reset and that takes time to build from… we had been a company that was trying to do too many things…” But was it? Other than Moments, which largely flopped, and the move to the algorithmic feed ranking, Twitter sure didn’t seem to be doing too much and was already being criticized for slow product evolution as it tried to avoid disturbing its most hardcore users.

On stagnation: “Some people talk about the slow pace of development at Twitter. The expectation is to see surface level changes, but the most impactful changes are happening below the surface” Dorsey claims, citing using machine learning to improve feed and notification relevance

Yet it seems telling that Twitter suddenly announced yesterday that it was testing Instagram Stories-esque feature Fleets in Brazil. No launch event. No US beta. No indication of when it might roll out elsewhere. It seems like hasty and suspiciously convenient timing for a reveal that might convince investors it is actually building new things.

On talent: Twitter is apparently hiring top engineers “that maybe we couldn’t get 3 years ago”. 2017 was also Twitter’s share price low point of $14 compared to $34 today, so it’s not much of an accomplishment that hiring is easier now. Dorsey claims that “Engineering is my main focus. Everything else follows from that.” Yet it’s been years since fail whales were prevalent, and the core concern now is that there’s not enough to do on Twitter, rather than what it does offer doesn’t function well.

On Jack himself: Dorsey says he should have added more context “about my intention to spend a few months in Africa this year”, including its growing population that’s still getting online. Yet the “Huge opportunity especially for young people to join Twitter” seemed far from his mind as he focused on how crypto trading was driving adoption of Square’s Cash App

“I need to reevaluate” the plan to work from Africa “in light of COVID-19 and everything else going on”. That makes coronavirus a nice scapegoat for the decision while the phrase “everything else” is doing some very heavy lifting in the face of Elliott’s activist investing.

Photographer: Cole Burston/Bloomberg via Getty Images

On fighting harassment: Nothing. The fact that Twitter’s most severe ongoing problem doesn’t even get a mention should clue you in to how many troubles have stacked up in front of Dorsey

Running Twitter is a big job. So big it’s seen a slew of leaders ranging from founders like Ev Williams to hired guns like Dick Costolo peel off after mediocre performance. If Dorsey wants to stay CEO, that should be his full-time, work-from-headquarters gig.

This isn’t just another business. Twitter is a crucial communications utility for the world. Its absence of innovation, failure to defend vulnerable users, and an inability to deliver financially has massive repercussions for society. It means Twitter hasn’t had the products or kept the users to earn the profits to be able to invest in solving its problems. Making Twitter live up to its potential is no sidehustle.

Catalyst Fund gets $15M from JP Morgan, UK Aid to back 30 EM fintech startups

January 20, 2020 by Blockchain Consultants

The Catalyst Fund has gained $15 million in new support from JP Morgan and UK Aid and will back 30 fintech startups in Africa, Asia, and Latin America over the next three years.

The Boston based accelerator provides mentorship and non-equity funding to early-stage tech ventures focused on driving financial inclusion in emerging and frontier markets.

That means connecting people who may not have access to basic financial services — like a bank account, credit or lending options — to those products.

Catalyst Fund will choose an annual cohort of 10 fintech startups in five designated countries: Kenya, Nigeria, South Africa, India and Mexico. Those selected will gain grant-funds and go through a six-month accelerator program. The details of that and how to apply are found here.

“We’re offering grants of up to $100,000 to early-stage companies, plus venture building support…and really…putting these companies on a path to product market fit,” Catalyst Fund Director Maelis Carraro told TechCrunch.

Program participants gain exposure to the fund’s investor networks and investor advisory committee, that include Accion and 500 Startups. With the $15 million Catalyst Fund will also make some additions to its network of global partners that support the accelerator program. Names will be forthcoming, but Carraro, was able to disclose that India’s Yes Bank and University of Cambridge are among them.

Catalyst fund has already accelerated 25 startups through its program. Companies, such as African payments venture ChipperCash and SokoWatch — an East African B2B e-commerce startup for informal retailers — have gone on to raise seven-figure rounds and expand to new markets.

Payment startup Chipper Cash raises $6M for Southern Africa expansion

Those are kinds of business moves Catalyst Fund aims to spur with its program. The accelerator was founded in 2016, backed by JP Morgan and the Bill & Melinda Gates Foundation.

Catalyst Fund is now supported and managed by Rockefeller Philanthropy Advisors and global tech consulting firm BFA.

African fintech startups have dominated the accelerator’s companies, comprising 56% of the portfolio into 2019.

That trend continued with Catalyst Fund’s most recent cohort, where five of six fintech ventures — Pesakit, Kwara, Cowrywise, Meerkat and Spoon — are African and one, agtech credit startup Farmart, operates in India.

The draw to Africa is because the continent demonstrates some of the greatest need for Catalyst Fund’s financial inclusion mission.

By several estimates, Africa is home to the largest share of the world’s unbanked population and has a sizable number of underbanked consumers and SMEs.

Roughly 66% of Sub-Saharan Africa’s 1 billion people don’t have a bank account, according to World Bank data.

Collectively, these numbers have led to the bulk of Africa’s VC funding going to thousands of fintech startups attempting to scale payment solutions on the continent.

Digital finance in Africa has also caught the attention of notable outside names. Twitter/Square CEO Jack Dorsey recently took an interest in Africa’s cryptocurrency potential and Wall Street giant Goldman Sachs has invested in fintech startups on the continent.

This lends to the question of JP Morgan’s interests vis-a-vis Catalyst Fund and Africa’s financial sector.

For now, JP Morgan doesn’t have plans to invest directly in Africa startups and is taking a long-view in its support of the accelerator, according to Colleen Briggs — JP Morgan’s Head of Community Innovation

“We find financial health and financial inclusion is a…cornerstone for inclusive growth…For us if you care about a stable economy, you have to start with financial inclusion,” said Briggs, who also oversees the Catalyst Fund.

This take aligns with JP Morgan’s 2019 announcement of a $125 million, philanthropic, five-year commitment to improve financial health in the U.S. and globally.

More recently, JP Morgan Chase posted some of the strongest financial results on Wall Street, with Q4 profits of $2.9 billion. It’ll be worth following if the company shifts its income-generating prowess to business and venture funding activities in Catalyst Fund markets such as Nigeria, India and Mexico.

What we know (and don’t) about Goldman Sachs’ Africa VC investing

2019 Africa Roundup: Jumia IPOs, China goes digital, Nigeria becomes fintech capital

December 30, 2019 by Blockchain Consultants

2019 brought more global attention to Africa’s tech scene than perhaps any previous year.

A high-profile IPO, visits by both Jacks (Ma and Dorsey) and big Chinese startup investment energized that.

The last 12 months served as a grande finale to 10 years that saw triple-digit increases in startup formation and VC on the continent.

Here’s an overview of the 2019 market events that captured attention and capped off a decade of rapid growth in African tech.

IPOs

The story of the year is the April IPO on the NYSE of Pan-African e-commerce company Jumia. This was the first listing of a VC-backed tech company operating in Africa on a major global exchange — which brought its own unpredictability.

Founded in 2012, Jumia pioneered much of its infrastructure to sell goods to consumers online in Africa.

With Nigeria as its base market, the Rocket Internet-backed company created accompanying delivery and payments services and went on to expand online verticals into 14 African countries (though it recently exited a few). Jumia now sells everything from mobile phones to diapers, and offers online services such as food-delivery and classifieds.

Seven years after its operational launch, Jumia’s stock debut kicked off with fanfare in 2019, only to be followed by volatility.

The online retailer gained investor confidence out of the gate, more than doubling its $14.95 opening share price post-IPO.

That lasted until May, when Jumia’s stock came under attack from short-seller Andrew Left, whose firm Citron Research issued a report accusing the company of fraud. The American activist investor’s case was bolstered, in part, by a debate that played out across Africa’s tech ecosystem on Jumia’s legitimacy as an African startup, given its (primarily) European senior management.

The entire affair was further complicated by Jumia’s second-quarter earnings call when the company disclosed a fraud perpetrated by some of its employees and sales agents. Jumia’s CEO Sacha Poignonnec emphasized the matter was closed, financially marginal and not the same as Andrew Left’s short-sell claims.

Pan-African e-tailer Jumia grows 3Q revenue, e-payments and losses

Whatever the balance, Jumia’s 2019 ups and downs cast a cloud over its stock with investors. Since the company’s third-quarter earnings-call, Jumia’s NYSE share-price has lingered at around $6 — less than half of its original $14.95 opening, and roughly 80% lower than its high.

Even with Jumia’s post-IPO rocky road, the continent’s leading e-commerce company still has a heap of capital and is on pace to generate more than $100 million in revenues in 2019 (albeit with big losses).

The company plans to reduce costs by generating more revenue from higher-margin internet services, such as payments and classifieds.

There’s a fairly simple equation for Jumia to rebuild shareholder confidence in 2020: avoid scandals and increase revenues over losses. And now that the company is publicly traded — with financial reporting requirements — there’ll be four earnings calls a year to evaluate Jumia’s progress.

Jumia may not be the continent’s standout IPO for much longer. Events in 2019 point to Interswitch becoming the second African digital company to list on a global exchange in 2020. The Nigerian fintech firm confirmed to TechCrunch in November it had reached a billion-dollar unicorn valuation, after a (reported) $200 million investment by Visa.

Nigeria’s Interswitch confirms $1B valuation after Visa investment

Founded in 2002 by Mitchell Elegbe, Interswitch created much of the initial infrastructure to digitize Nigeria’s (then) predominantly cash-based economy. Interswitch has been teasing a public listing since 2016, but delayed it for various reasons. With the company’s billion-dollar valuation in 2019, that pause is likely to end.

“An [Interswitch] IPO is still very much in the cards; likely sometime in the first half of 2020,” a source with knowledge of the situation told TechCrunch.

China-Africa goes digital

2019 was the year when Chinese actors pivoted to African tech. China is known for its strategic relationship with Africa, based (largely) on trade and infrastructure. Over the last 10 years, the country has been less engaged in the continent’s digital scene.

china That was until a torrent of investment and partnerships this past year.

July saw Chinese-owned Opera raise $50 million in venture spending to support its growing West African digital commercial network, which includes browser, payments and ride-hail services.

In August, San Francisco and Lagos-based fintech startup Flutterwave partnered with Chinese e-commerce company Alibaba’s Alipay to offer digital payments between Africa and China.

In September, China’s Transsion — the largest smartphone seller in Africa — listed in an IPO on Shanghai’s new STAR Market. The company raised ≈ $394 million, some of which it is directing toward venture funding and operational expansion in Africa.

The last quarter of 2019 brought a November surprise from China in African tech. More than 15 Chinese investors placed over $240 million in three rounds. Transsion-backed consumer payments startup PalmPay raised a $40 million seed, stating its goal to become “Africa’s largest financial services platform.”

Chinese investors also backed Opera-owned OPay’s $120 million raise and East-African trucking logistics company Lori Systems’ (reported) $30 million Series B.

In the new year, TechCrunch will continue to cover the business arc of this surge in Chinese tech investment in Africa. There’ll surely be a number of fresh macro news points to develop, given the debate (and critique) of China’s engagement with Africa.

Nigeria and fintech

On debate, the case could be made that 2019 was the year when Nigeria become Africa’s unofficial capital for fintech investment and digital finance startups.

Kenya has held this title hereto, with the local success and global acclaim of its M-Pesa mobile-money product. But more founders and VCs are opting for Nigeria as the epicenter for digital finance growth on the continent. Nigeria

A rough tally of 2019 TechCrunch coverage — including previously mentioned rounds — pegs fintech-related investment in the West African country at around $400 million over the last 12 months. That’s equivalent to roughly one-third of all startup VC raised for the entire continent in 2018, according to Partech stats.

From OPay to PalmPay to Visa — startups, big finance companies and investors are making Nigeria home-base for their digital finance operations and Africa expansion strategies.

The founder of early-stage payment startup ChipperCash, Ham Serunjogi, explained the imperative to operating there. “Nigeria is the largest economy and most populous country in Africa. Its fintech industry is one of the most advanced in Africa, up there with Kenya and South Africa,” he told TechCrunch in May.

When all the 2019 VC numbers are counted, it will be worth matching up fintech stats for Nigeria to Kenya to see how the countries compared.

Acquisitions

Tech acquisitions continue to be somewhat rare in Africa, but there were several to note in 2019. Two of the continent’s powerhouse tech incubators joined forces in September, when Nigerian innovation center and seed-fund CcHub acquired Nairobi-based iHub, for an undisclosed amount.

CChub

The acquisition brought together Africa’s most powerful tech hubs by membership networks, volume of programs, startups incubated and global visibility. It also elevated the standing of CcHub’s Bosun Tijani across Africa’s tech ecosystem, as the CEO of the new joint entity, which also has a VC arm.

CcHub/iHub CEO Bosun Tijani

In other acquisition activity, French television company Canal+ acquired the ROK film studio from Nigerian VOD company IROKOtv for an undisclosed amount. The deal put ROK founder and producer Mary Njoku in charge of a new organization with larger scope and resources.

Many outside Africa aren’t aware that Nigeria’s Nollywood is the Hollywood of the continent, and one of the largest film industries in the world (by production volume). Canal+ told TechCrunch it looks to bring Mary and the Nollywood production ethos to produce content in French-speaking African countries.

Other notable 2019 African tech takeovers included Kenyan internet company BRCK’s acquisition of ISP Surf, Nigerian digital-lending startup OneFi’s Amplify buy and Merck KGaa’s purchase of Kenya-based online healthtech company ConnectMed.

Moto ride-hail mania

In 2019, Africa’s motorcycle ride-hail market — worth an estimated $4 billion — saw a flurry of investment and expansion by startups looking to scale on-demand taxi services. Uber and Bolt got into the motorcycle taxi business in Africa in 2018.

Ampersand in Rwanda

A number of local and foreign startups have continued to grow in key countries, such as Nigeria, Uganda and Kenya.

A battle for funding and market share emerged in Nigeria in 2019, between key moto ride-hail startups MAX.ng, Gokada and Opera-owned ORide.

The on-demand motorcycle market in Africa has attracted foreign investment and moved toward EV development. In May, MAX.ng raised a $7 million Series A round with participation from Yamaha and is using a portion to pilot renewable energy powered e-motorcycles in Africa.

In August, the government of Rwanda announced a national policy to phase out gas-motorcycle taxis altogether in favor of e-motos, in partnership with early-stage EV startup Ampersand.

New funds

The past year saw several new funding initiatives for Africa’s startups. Senegalese VC investor Marieme Diop spearheaded Dakar Network Angels, a seed-fund for startups in French-speaking Africa — or 24 of the continent’s 54 countries.

Africinvest teamed up with Cathay Innovation to announce the Cathay Africinvest Innovation Fund, a $100+ million capital pool aimed at Series A to C-stage startup investments in fintech, logistics, AI, ag tech and education tech.

Accion Venture Lab launched a $24 million fintech fund open to African startups.

And Naspers offered more details on who can pitch to its 1.4 billion rand (≈$100 million) Naspers Foundry fund, which made its first investment in online cleaning services company SweepSouth.

Closed up shop

Like any tech ecosystem, not every startup in Africa killed it or even continued to tread water in 2019. Two e-commerce companies — DealDey in Nigeria and Afrimarket in Ivory Coast — closed up digital shop.

Southern Africa’s Econet Media shut down its Kwese TV digital entertainment business in August.

And South Africa-based, Pan African-focused cryptocurrency payment startup Wala ceased operations in June. Founder Tricia Martinez named the continent’s poor infrastructure as one of the culprits to shutting down. A possible signal to the startup’s demise could have been its 2017 ICO, where Wala netted only 4% of its $30 million token offering.

Africa’s startups go global

2019 saw more startups expand to new markets abroad products and business models developed in Africa. In March, FlexClub — a South African venture that matches investors and drivers to cars for ride-hailing services — announced its expansion to Mexico in a partnership with Uber.

In May, Extra Crunch profiled three African-founded fintech startups — Flutterwave, Migo and ChipperCash — developing their business models strategically in Africa toward plans to expand globally.

These startups are locating in SF and Africa to win in global fintech

By December, Migo (formerly branded Mines) had announced its expansion to Brazil on a $20 million Series B raise.

2020 and beyond

As we look to what could come in the new year and decade for African tech, it’s telling to look back. Ten years ago, there were a lot of “if” questions on whether the continent’s ecosystem could produce certain events: billion-dollar startup valuations, IPOs on major exchanges, global expansion, investment from the world’s top VCs.

All those questionable events of the past have become reality in African tech, even if some of them are still in low abundance.

There’s no crystal ball for any innovation ecosystem — not the least Africa’s — but there are several things I’ll be on the lookout for in 2020 and beyond.

In the near term I’ll start with what Twitter/Square CEO Jack Dorsey may do around Bitcoin and cryptocurrency on his return to Africa (lookout for an upcoming TechCrunch feature on this).

I’ll also follow the next-phase of e-commerce in Africa, which could pit Jumia more competitively against DHL’s Africa eShop, Opera and China’s Alibaba (which hasn’t yet entered Africa in full).

On a longer-term basis, a development to follow is how the continent’s first wave of millionaire and billionaire tech-founders could disrupt 21st century dynamics in Africa around politics, power and philanthropy — hopefully for the better.

More notable 2019 Africa-related coverage @TechCrunch

This startup is using geo-tagging and blockchain to fight deforestation in Africa

December 24, 2019 by Blockchain Consultants

(CNN)Every year, about 15 billion trees are cut down globally, and across Africa, deforestation rates has surpassed the global annual average of 0.8 percent.

One reason for this is that people living in rural areas in Africa still depend on wood from felled trees for their cooking, according to the Africa Energy Outlook 2019 report.

‘My Roots in Africa’

An African startup is trying to be a part of the solution to this deforestation crisis. The Most Influential People of African Descent (MIPAD), a group working to bridge the gap between Africans in the diaspora and those living on the continent, wants people to have roots in Africa — literally.

Through a social impact initiative, the group wants to plant and assign more than 200 million trees across Africa by 2024 before the end of the UN International Decade for People of African Descent.

From any part of the world, My Roots in Africa Project, makes it possible for anyone to place a request to have a tree named, planted or gifted in honor of themselves or anyone they love.

“My Roots in Africa is…Uber for trees, connecting local communities impacted by pollution or deforestation, with global citizens looking to plant their roots in Africa,” said Kamil Olufowobi, MIPAD’s Founder and CEO.

“It presents an opportunity where Africa wins, the diaspora wins, and all of humanity wins. It supports the diaspora to reduce their barrier of entry to Africa.

The new initiative will be officially launched in February 2020 on the sidelines of the African Union Summit and aims to drive support for the Great Green Wall while also promoting climate action one of the United Nations’ Sustainable Development Goals.

“For every new tree that is planted, we can name one that is existing after you. Many diasporans want to connect to Africa and there is a deep sentimental and emotional connection that this program brings which is ‘now I have roots in Africa’,” Olufowobi told CNN.

To further personalize the service, MIPAD partnered with Decagon Institute to deploy data science and artificial intelligence to identify and geo-tag trees planted using blockchain technology.

This will enable its subscribers to know the exact location of their allocated tree and be able to see it using satellite imagery including Google Maps. It also helps prevent allocating the same tree to more than one person.

Planting trees remotely

MIPAD says it is already working with city parks and forestry departments in every major African city to help people plant their tree remotely.

“We get the orders placed and the park and forestry departments are the ones who do the implementation. They are the owners of the trees, all we are doing is being the voice of Africa to the diaspora saying ‘you can support Africa and in return, you can have your root planted,” Olufowobi said.

MIPAD is banking on its history of connecting Africans to get them involved in the project.

In line with the UN’s declaration of the International Decade for People of African Descent, MIPAD identified people of African descent from all parts of the world and has so far honored around 500 people in over 60 countries.

Several African countries are also planting trees.

In July 2019, Ethiopia planted 350 million trees in a day, setting a new world record. The government has also joined more than 20 other African nations in pledging to restore 100 million hectares of land as part of the African Forest Landscape Restoration Initiative.

About five months after this feat, Nigeria’s President Muhammadu Buhari announced that the continent’s most populous country will plant a further 25 million trees as part of the Great Green Wall — an ambitious project aiming to plant trees spanning 8000 km and stretching the breadth of Africa from Senegal to Djibouti.

‘Africa is our collective responsibility’

The continuity of long-term projects such as planting millions of trees and combating climate change is a major concern in several African democracies where incoming governments often disregard or abandon long-term projects by their predecessors.

Olumide Idowu, co-founder of the International Climate Change Development Initiative argued that afforestation projects will help Africa to tackle threats posed by climate change such as floods, droughts and heat stress and forests.

Can Kenya sustain its charcoal consumption?

Idowu said developed countries can help preserve Africa’s forests if they reduce the demand for tropical hardwoods considering that the timber export market is a big driver of deforestation.

To repair the damage that has been done already and to secure the future of the continent’s forests, the MIPAD CEO said Africa needs help from around the world.

“All of humanity, we were Africans first before we were anything else.”

Therefore, Africa is our collective responsibility. This is not restricted to people of African descent, this is open to all of humanity for you to support Africa and have your root planted right here on African soil,” Olufowobi told CNN.

These startups are locating in SF and Africa to win in global fintech

May 26, 2019 by Blockchain Consultants

To become a global fintech player, locate your company in San Francisco and Africa.

That’s the approach of payments company Flutterwave, digital lending startup Mines, and mobile-money venture Chipper Cash—Africa-founded ventures that maintain headquarters in San Francisco and operations in Africa to tap the best of both worlds in VC, developers, clients, and the frontier of digital finance.

This arrangement wasn’t exactly coordinated across the ventures, but TechCrunch coverage picked up the trend and some common motives among these rising fintech firms.

Founded in 2016 by Nigerians Iyinoluwa Aboyeji and Olugbenga Agboola, Flutterwave has positioned itself as a global B2B payments solutions platform for companies in Africa to pay other companies on the continent and abroad.

Clients can tap its APIs and work with Flutterwave developers to customize payments applications. Existing customers include Uber, Booking.com and African e-commerce unicorn Jumia.com.

The Y-Combinator backed company is headquartered in San Francisco, runs its operations center in Nigeria, and plans to add offices in South Africa and Cameroon.

Flutterwave opened an office in Uganda in June and raised a $10 million Series A round in October. The company also plugged into ledger activity in 2018, becoming a payment processing partner to the Ripple and Stellar blockchain networks.

Kidnappers snatch a 13-year-old South African boy and demand his ransom be paid in bitcoins

May 24, 2018 by Blockchain Consultants

Lagos, Nigeria (CNN)A group of South African kidnappers who snatched a 13-year-old boy as he played with friends have demanded a $120,000 ransom in bitcoin cryptocurrency, police say.

Police spokesman Brigadier Leonard Hlathi told CNN the incident in the coal-mining city of Witbank was over in minutes and the abductors seemed to make a beeline for Marite.

“It happened very fast and there was no struggle,” Hlathi told CNN.

“His friends reported that these were full grown men who just went for him and grabbed him into the car and dropped a ransom note. They demanded that his parents should pay a ransom in bitcoins.”

Hlathi said the sum demanded was 15 bitcoins, which is roughly equivalent to $120,000 in cash.

A copy of the ransom note was also posted on several social media accounts.

The kidnappers warn the parents not to involve the police, saying: “We have your child. Your child will not be harmed if the following demands are met.”

The note asks the boy’s family to pay 1 bitcoin by May 21 and the full amount by May 27. The family has yet to pay any of the ransom, Hlathi said.

Bitcoin is a new currency that is not tied to any country or subject to regulation. Bitcoins are traded on exchanges and stored in virtual bank accounts called digital wallets.

The ransom note also included information about a wallet to which to send the payment.

Hlathi said the case was puzzling as Marite’s parents are not wealthy and do not know what bitcoin currency is.

“They are just in tatters right now,” he said.

He added that he was not aware of any other ransom demands for bitcoins or any virtual currency in South Africa.

Although South Africa has a high crime rate, Hlathi said Witbank is a mining area where kidnapping is not frequent.

In December, kidnappers in Ukraine received a ransom worth more than one million in bitcoins for releasing their victim — an employee of a British cryptocurrency exchange, according to a report from Reuters news agency.