Nigerian Web3 Startup, Nestcoin, Admits Funds Stuck in FTX – Releases 30 Employees

Nestcoin, a startup that builds, operates, and invests in Web3 applications for Africa, has been forced to release some of its employees following the FTX bankruptcy.

In a statement, CEO and founder, Yele Bademosi, said the company has some of its funds held in the FTX exchange.

“While there are uncertainties including the outcomes of our assets held at FTX, we as a company have to adjust our plans, rethink our strategy, and take steps to better ourselves for the future.”

Founded in late 2021, Nestcoin raised a $6.45 million pre-seed investment in February 2022 with several participants including Alameda Research, the quantitative trading firm linked with FTX.

According to Bademosi, some of the money they raised was then held in FTX, either as stablecoins or cash.

The company was using these funds to pay operational expenses and says they were not trading but custodying their assets on the exchange.

“Unfortunately this means saying goodbye to some of our very talented Nestors. As a leadership team, our immediate priority is to conduct this tough task in a compassionate manner and with respect to our departing colleagues”

Additional reporting indicates that 30 employees are affected by the decision.

The employees worked in various departments including:

• Breach, Nestcoin’s media arm;
• Brunch, a group messaging app with a crypto wallet; and
• Metaverse Magma (MVM), a gaming DAO that raised $3.2 million at a $30 million valuation two months ago

Besides releasing employees, the remaining staff will reportedly see their salaries cut by 40%.

Nestcoin is not the only startup from Africa to receive backing from FTX or Alameda Research. A few other African companies out of over 200 investments by the Sam Bankman-Fried-led organizations made in the last 2 years, were also affected.

These startups includes:

• Pan-African fintech, Chipper Cash
• South African exchange, VALR
• Congolese Web3 Startup, Jambo
• Kenyan/Nigerian Exchange, MARA

None of these companies have said their funds are locked in FTX, at least not yet. However, globally Nestcoin is one of several companies including hedge fund Galois capital, Genesis trading, and Multicoin capital which have large amounts trapped on FTX.