African web3 startup Nestcoin has taken the step to downsize its employees as FTX’s demise impacted its business. This is based on the information that was shared by the startup’s CEO, ‘Yele Bademosi’, who in a tweet, made clear FTX’s fall from grace affected his one-year-old startup “as we held our assets (cash and stablecoins) at FTX to manage our operational expenses”.
According to the source familiar with the developing story cited since Sam Bankman-Fried’s crypto empire, made up of FTX, Alameda Research, and FTX Ventures, collapsed the previous week, there have been various reports of companies whose money is stuck on FTX, its crypto exchange platform. Some of them include Genesis Trading, which reportedly had about $175 million stuck on the crypto exchange; Galois Capital, understood to have a hedge fund with half of its assets stuck on FTX; Multicoin, the famed web3 venture capital firm that had almost 10% of its assets under management trapped. Based on the aforementioned, it seems all of Nestcoin’s assets, which joined the list with known names growing by the day.
Based on reports from a number of sources, companies with money stuck on FTX could get their money back depending on how much FTX’s assets are ultimately worth. However, according to FTX’s 23-page bankruptcy filing, it has over 100,000 creditors with assets in the range of $10 billion to $50 billion and liabilities from $10 billion to $50 billion.
In view of this, it’s worth noting that startup Nestcoin is one of a handful of companies that have received capital from FTX and Alameda Research coupled with other U.S. and Western-based companies. To be particular, FTX, for example, led the $150 million Series C extension round in Chipper Cash, an African payments company; Alameda Research, on the other hand, has backed the subject startup – Nestcoin, Nigeria and Kenya-based web3 company Mara, Congolese web3 startup Jambo. This begs the question if these startups held their assets in FTX, but that’s likely the case given the outcome with Nestcoin.
Bademosi in a tweet, cited: “We used the closely-associated exchange, FTX, as a custodian to store a significant proportion of the stablecoin investment we raised – i.e., our day-to-day operational budget. We were not undertaking any trading, but simply custodied our assets on the FTX exchange. While there are uncertainties, including the outcome of our assets held at FTX, we as a company have to adjust our plans, rethink our strategy and take steps to better position ourselves for the future”.
Based on this, the subject startup has had to downsize its headcount. According to people familiar with the developing story, Nestcoin layoffs will affect at least 30 employees from sub-departments, which cut across Breach, Brunch, and MVM, a sister product that raised $3 million months ago; as for the remaining staff, they will likely see their salaries cut as much as 40%, the people affirmed.
This is currently viewed as a wake-up call to focus on building a more decentralized crypto future where no individual or organization can amass enough power to influence such an industry with great potential, noting that the current concern is really a challenging time for the industry as a whole.
Nestcoin clarifies that the team has a renewed sense of purpose – we realize that for crypto to truly go mainstream, we must accelerate the transition to its custody by building compelling trustless crypto products. Adding that, to succeed, we will remain relentless, resourceful, and flexible to navigate these hard times.
- What’s your take on this developing story?