eBusiness Weekly
Jeffrey Gogo
After an indirect ban on crypto assets by the Reserve Bank of Zimbabwe crippled operations at Golix, the Harare-based digital currency exchange is now trying to reinvent itself.Chief executive officer Tawanda Kembo announced last week that the exchange had morphed into a peer-to-peer (P2P) trading platform for traders in Zimbabwe, a feature that cannot be affected by the central bank’s ban.
“We’ve launched a peer-to-peer exchange for customers in Zimbabwe so you can now buy/sell bitcoin in Zimbabwe. To access it, you’ll need to change your country to Zimbabwe in the settings page,” Kembo said in a statement recently.
The decentralised platform allows Zimbabweans to buy and sell bitcoin without the need for intermediaries such as legacy financial institutions, such as commercial banks, a tool used by the RBZ to paralyse operations at Golix and Styx24 in May.
The central bank ordered banks to close accounts belonging to the two exchanges, effectively cutting off their air supply. And with that, all centralised digital currency trading activities effectively ceased in the country.
However, Golix’s decision to evolve into a P2P platform for Zimbabwean users frees it, at least for now, from the threat of abuse by the financial regulator. Golix will not hold any money on behalf of traders in a bank account, so the RBZ can’t shut them down. All BTC deposits will be held in escrow and cash transactions happen directly between individuals. In that sense, Golix will only function as a platform that allows buyers to meet sellers and vice versa.
Golix now offers its services to people in at least six other African countries, despite the fact that it has struggled to grow trade volume in those jurisdictions. However, the company’s misadventures in Zimbabwe have dealt it a major confidence blow. It won’t be an easy comeback.
The exchange has often been dogged by issues unfulfilled orders, repeat bugs and others. Its failure to reimburse customers who held money on the exchange when the RBZ ban came into force is perhaps its biggest undoing.
That took a lot of confidence away from the platform. Golix’s social media channels on Telegram, Twitter or Facebook are often a snakepit, traders expressing utter frustration at the way Kembo and his team are running an exchange that at some point held a lot of promise.
The Golix facebook page doesn’t always respond to investor concerns, a situation that has left many in doubt.
In his statement, Kembo committed to addressing some of these issues. He explained: “We’ve launched a new version of Golix. We’ve added our first security token: GMA. It’s trading now against the BTC, USDT and ETH pairs.
“We’ve redesigned the whole website to make it load much faster. This is the fastest version of Golix that we’ve launched to-date. We’ve fixed a bug that caused an error when you try to make a withdrawal We’ve integrated live chat on every page to make it easier for you to reach us when you have a problem or question.”.
He didn’t get a lot of cheer from the Golix Telegram community, which accused the exchange of ripping them off, particularly during its $32 million initial coin offering.
For some time, virtual currencies have operated under a cloud of uncertainty in Zimbabwe. But the ban on cryptocurrencies — announced by the Reserve Bank of Zimbabwe in May — pointed to the start of a dark and unpredictable phase, as it crippled the operations of the country’s only two digital currency trading platforms, Golix and Styx24. Ever since, bitcoin trades in the southern African country have gone underground or shifted to social media platforms like Whatsapp, where the risk of theft or fraud is significantly higher.
The RBZ essentially lacks the power to shut down cryptocurrency exchanges, which have been accused of providing unlicensed banking services, in violation of the Exchange Control Act. But the law does not allow it to ban cryptocurrencies, either. An earlier attempt by the Reserve Bank of Zimbabwe to directly close down Golix was quashed by the High Court, which ruled that John Mangudya, the governor of the central bank, did not have jurisdiction over the country’s crypto-landscape.
