On November 14, Nestcoin, one of the leading crypto and web3 startups in Africa, has announced that it is laying off several employees. At least 30 employees in various departments have been let go and those who remain in the company have had their salaries reduced by 40 percent, people familiar with the matter said. The news is partly related to the collapse of the crypto exchange FTX, CEO Yelle Bademosi said.
Bademosi disclosed the news in a letter to investors. It has been blocked by Twitter.. Nestcoin has admitted to managing operating costs in its bankrupt crypto exchange platform FTX, which the Financial Times values at $4 million. Most of FTX’s customers were unable to withdraw their funds from the platform as the Bahamas-headquartered company went through bankruptcy proceedings.
Bademosi also revealed that Alameda Research, FTX’s trading-focused sister entity, was one of the investors in Nestcoin’s $6.45 million pre-seed round this February with less than 1% equity. Other African companies that have received funding from Alameda and FTX include Chipper Cash, Mara, ValR, Jumbo and Bitnob.
There were speculations that FTX and Alameda may require their portfolio companies to hold their assets on the FTX exchange as part of their investment terms. However, if these terms exist, it seems that they do not apply to every company, or some may have rejected the offer. VALRFor example, he said he was never asked for the terms he said. FTX has offered to invest in Bitnob stablecoins, to take control of the uninterrupted exchange, but the Nigerian crypto platform rejected, according to two people familiar with the matter. Both companies publicly stated that they had zero exposure to FTX as a result of the accident.
Mara confirmed to TechCrunch that he is not involved in any arrangement and that the assets will not be placed on the bankruptcy crypto platform. Chipper Cash is also not exposed, according to two people familiar with the company’s relationship with FTX. Jambo has not yet responded to TechCrunch’s request for comment.
For many crypto companies and retail customers, FTX acted as a bank, offering an 8% annual interest rate on stablecoins stored on the platform. It was the perfect transaction needed to get on board with the large number of customers in Africa and challenge Binance, the world’s largest crypto exchange by volume, for market share. FTX managed to land more than 100,000 customers in Africa before its demise, sources told TechCrunch. In addition to trading on the platform, these customers were able to use FTX to convert their local currency into dollars to get a return on savings.
Over the past two years, FTX has built a large following among the crypto community in Africa by tapping into the continent’s unstable banking and fast cryptocurrencies (mostly through the use of remittances). It is also worth emphasizing that FTX trading in Africa is not another attempt to increase the overall size of the platform. Rather, it was a focus area for the company. Before FTX CEO Sam Bankman-Fried (aka “SBF”) saw the $32 billion crypto behemoth evaporate this month, FTX was doing billions of dollars a month and was planning to set up an office in Nigeria, according to two people familiar with the company’s dealings. .
Combined with the raking in these numbers, after a few months in the region, three full-time employees working remotely and about 30 campus and business ambassadors were preaching the SBF gospel at college-wide events. Listen. However, following the events that led to FTX’s downfall in the past two weeks, many, including local celebrities signed on as brand ambassadors, have been regretting their decision.
For example, on the day FTX declared bankruptcy, Harrison Obiefule, FTX’s Public Relations and Marketing Manager in Africa; He tweeted. He said he was in hiding and was receiving “threats and calls from celebrities, family and friends and strangers.” Meanwhile, TechCrunch has learned of retail customers who have been locked out of FTX, from $7,000 to a celebrity who lost “millions of naira” on a World Cup trip, and a businessman who had $2 million saved on FTX. Sequoia powered crypto platform installed.
“All my UK ISA [Individual Savings Account, an account that allows users to save and invest free from UK tax] What I saved for the last 15 years is what I lost.” Victor AsemotaA veteran of the Nigerian tech industry and a staunch advocate for FTX in Africa spoke to TechCrunch on a call. “You know you laugh at people losing money in Ponzi schemes in those days. I didn’t know it could happen to me. This is the biggest Ponzi scheme ever. It’s crazy – it’s the last thing anyone expects.
The consequences of meltdown for FTX are dire. After SBF used billions of dollars in client funds to expand Alameda Research, FTX’s bankruptcy filings show it owes more than a million people and businesses. But this incident pushes forward regulatory changes for crypto in various markets as FTX and its CEO face criminal investigations. In countries such as Nigeria, where the government has previously banned cryptocurrency transactions by licensed banks and introduced digital currencies to reduce incentives to use unregulated crypto, the crackdown on crypto use may intensify.
“CBN [Nigeria’s apex bank] And they argue that regulators were right to ban crypto,” said Asemota, who has invested in several crypto upstarts. “All of us who support crypto are fools and now they seem right because of FTX. I am afraid of crypto companies in Nigeria.
Once valued at $32 billion, FTX marketed itself. Now worthless, FTX owes creditors at least $8 billion. The bankruptcy filing also showed a house that was consolidating its assets and not keeping its books. In one case, FTX It was included by mistake BTC Africa, Kenya-based payments automation and settlement platform AZA Financial and its affiliates are entities under Chapter 11 bankruptcy filings. FTX, via Twitter, later He retracted his statement. and excluded AZA Finance and its partners, among other entities, from the application.
This April, FTX announced a partnership with AZA Finance to develop and expand trading of African and digital currency pairs. Senegal before FTX failure). That partnership, some sources say, turned into an M&A game in which FTX offered to finance AZA pending regulatory approval. However, AZA Finance CEO Elizabeth Rossello dismissed the acquisition talks, telling TechCrush that the two were just partners.
“You’re either a shareholder or you’re not, and they weren’t,” the CEO said. “And if they were a shareholder, we would have had to do a change of control in the UK where we were licensed. It is a public report that it did not happen. They didn’t invest in us, they weren’t shareholders, there was no acquisition.
Rossello described FTX’s mistake as a “total lack of internal control” while referring to a statement by FTX’s new chief executive on the company, which followed the resignation of the legal and compliance team. She pointed out how unfair it was to smaller fintechs, including platforms like FTX that hold billions in customer funds and have no access to customer deposits.
Fintechs like us who have so much information and a regulatory board have a hard time even making money. But because some people look a certain way or tick a certain box, they get all the funding, no management, no reporting, and no accounting department. I mean it’s not fair and it just goes back to the funded question, I think that’s the real story here.