FTX’s collapse plagues African fintech firms
The collapse of the once-beloved cryptocurrency exchange, FTX, is having an impact on some fintech companies in Africa.
Days after FTX filed for chapter 11 bankruptcy protection in the US, Nestcoin, a Nigerian web3 startup announced that it was laying off some of its employees as the firm held its assets (cash and stablecoins) on FTX. This was “to manage our operating expenses,” the startup said.
Nestcoin, which launched in November 2021, explained that it raised capital from a number of investors last year, including Alameda Research, a quantitative trading firm and corporate sibling of FTX.
“For context, Alameda’s equity is less than 1%. We used the closely related exchange, FTX, as a custodian to store a significant portion of the stablecoin investment we raised — i.e. our daily operating budget,” Yele Bademosi, Nestcoin’s founder explained in a statement shared on Twitter.
Nestcoin further clarified that it was not engaged in any trading “but only held our assets on the FTX exchange.”
An update shared with our investors earlier today on the FTX incident and its impact on @Nestcoin. pic.twitter.com/0Mjo4SYF7R
— YB (25.25) ⏳ (@YeleBademosi) 14 November 2022
Financial tycoon reported in February that the Nigerian firm, whose portfolio includes a crypto education medium, a gaming guild and a blockchain-based payment gateway, raised $6.45 million in a funding round in which Alameda Research and tennis star Serena Williams’ Serena Ventures participated. .
Other FTX investments in Africa
However, Nestcoin is only one of a handful of African startups that have received funding support from FTX and its sister company Alameda Research. Last November, Chipper Cash, an African fintech unicorn and cross-border payments company, raised $150 million from a Series C expansion round led by FTX. Additionally, Alameda Research has also invested in MARA, an Africa-focused crypto exchange startup with bases in Nigeria and Kenya; VALR, a South Africa-based digital asset trading platform; and Jambo, a Congo-based web3 startup.
In May 2022, MARA raised $23 million in stock and token sales from Alameda Research, Coinbase Ventures and Distributed Global. VALR’s $50 million Series B funding round earlier in March this year also enjoyed the participation of Alameda Research and top venture capitalists. Furthermore, in February 2022, Jambo raised $7.5 million from Alameda Research and Coinbase to build the “web3 onboarding portal of Africa”.
Although most of these firms have confirmed that they had no exposure to FTX, eyes are on them, especially as events unfold in the wake of FTX’s collapse.
Hindered expansion into Africa?
In one of the latest developments in Africa regarding FTX’s collapse, the Bahamas-headquartered crypto exchange lost its Financial Service Provider (FSP) license in South Africa. This is because Ovex, a South Africa-based cryptocurrency marker, removed the digital asset firm as its legal representative. The market maker last April had raised R60 million (about $3.5 million) from FTX.
Meanwhile, TechCrunch reports FTX processed billions of dollars monthly in Africa before it crumbled. The crypto exchange also planned to establish an office in Nigeria, Africa’s most populous nation and largest economy, the outlet reported.
In other news, AZA Finance, a Kenya-based payment automation and settlement platform, recently condemned FTX’s listing of BTC Africa and 22 of its subsidiaries in the Chapter 11 bankruptcy filing. Elizabeth Rossiello, CEO and founder of AZA Finance, clarified that it only entered into a commercial partnership with FTX Africa to help expand web3 in Africa by building “regulated, secure and affordable payment rails” for FTX.
@FTX_Official NOT acquired @aza_africa or E4F – this list is incorrect. We were JUST partners and there were no shareholdings. We are licensed in multiple jurisdictions and our ownership is public. The FTX org chart is obviously as messed up as the rest of it
— Elizabeth Rossiello (@e_rossiello) 11 November 2022
Note: AZA Finance and our entities are not affected @FTX_Official bankruptcy, nor by the events of this week. FTX are not shareholders in@aza_africa, E4F or other entities of ours – the circulating list/org chart is incorrect. We remain stable, open and operating normally. https://t.co/uvHtXn09pu
— AZA Finance (@aza_africa) 11 November 2022
FTX later released a statement clarifying that it does not own BTC Africa and its subsidiaries.
Press release: Clarification about certain entities not included in Chapter 11 filing. pic.twitter.com/rxmY2f2iTB
— FTX (@FTX_Official) 12 November 2022
In April this year, FTX entered into a partnership with AZA Finance to roll out its digital asset services in West Africa. The plan, according to s Bloomberg the report, should launch the services within a few months, and gradually spread across the continent over the next two years from that point.
However, the collapse of the once-beloved exchange means that this plan for Africa may never materialize.
The collapse of the once-beloved cryptocurrency exchange, FTX, is having an impact on some fintech companies in Africa.
Days after FTX filed for chapter 11 bankruptcy protection in the US, Nestcoin, a Nigerian web3 startup announced that it was laying off some of its employees as the firm held its assets (cash and stablecoins) on FTX. This was “to manage our operating expenses,” the startup said.
Nestcoin, which launched in November 2021, explained that it raised capital from a number of investors last year, including Alameda Research, a quantitative trading firm and corporate sibling of FTX.
“For context, Alameda’s equity is less than 1%. We used the closely related exchange, FTX, as a custodian to store a significant portion of the stablecoin investment we raised — i.e. our daily operating budget,” Yele Bademosi, Nestcoin’s founder explained in a statement shared on Twitter.
Nestcoin further clarified that it was not engaged in any trading “but only held our assets on the FTX exchange.”
An update shared with our investors earlier today on the FTX incident and its impact on @Nestcoin. pic.twitter.com/0Mjo4SYF7R
— YB (25.25) ⏳ (@YeleBademosi) 14 November 2022
Financial tycoon reported in February that the Nigerian firm, whose portfolio includes a crypto education medium, a gaming guild and a blockchain-based payment gateway, raised $6.45 million in a funding round in which Alameda Research and tennis star Serena Williams’ Serena Ventures participated. .
Other FTX investments in Africa
However, Nestcoin is only one of a handful of African startups that have received funding support from FTX and its sister company Alameda Research. Last November, Chipper Cash, an African fintech unicorn and cross-border payments company, raised $150 million from a Series C expansion round led by FTX. Additionally, Alameda Research has also invested in MARA, an Africa-focused crypto exchange startup with bases in Nigeria and Kenya; VALR, a South Africa-based digital asset trading platform; and Jambo, a Congo-based web3 startup.
In May 2022, MARA raised $23 million in stock and token sales from Alameda Research, Coinbase Ventures and Distributed Global. VALR’s $50 million Series B funding round earlier in March this year also enjoyed the participation of Alameda Research and top venture capitalists. Furthermore, in February 2022, Jambo raised $7.5 million from Alameda Research and Coinbase to build the “web3 onboarding portal of Africa”.
Although most of these firms have confirmed that they had no exposure to FTX, eyes are on them, especially as events unfold in the wake of FTX’s collapse.
Hindered expansion into Africa?
In one of the latest developments in Africa regarding FTX’s collapse, the Bahamas-headquartered crypto exchange lost its Financial Service Provider (FSP) license in South Africa. This is because Ovex, a South Africa-based cryptocurrency marker, removed the digital asset firm as its legal representative. The market maker last April had raised R60 million (about $3.5 million) from FTX.
Meanwhile, TechCrunch reports FTX processed billions of dollars monthly in Africa before it crumbled. The crypto exchange also planned to establish an office in Nigeria, Africa’s most populous nation and largest economy, the outlet reported.
In other news, AZA Finance, a Kenya-based payment automation and settlement platform, recently condemned FTX’s listing of BTC Africa and 22 of its subsidiaries in the Chapter 11 bankruptcy filing. Elizabeth Rossiello, CEO and founder of AZA Finance, clarified that they entered into a commercial partnership with FTX Africa only to help expand web3 in Africa by building “regulated, secure and affordable payment rails” for FTX.
@FTX_Official NOT acquired @aza_africa or E4F – this list is incorrect. We were JUST partners and there were no shareholdings. We are licensed in multiple jurisdictions and our ownership is public. The FTX org chart is obviously as messed up as the rest of it
— Elizabeth Rossiello (@e_rossiello) 11 November 2022
Note: AZA Finance and our entities are not affected @FTX_Official bankruptcy, nor by the events of this week. FTX are not shareholders in@aza_africa, E4F or other entities of ours – the circulating list/org chart is incorrect. We remain stable, open and operating normally. https://t.co/uvHtXn09pu
— AZA Finance (@aza_africa) 11 November 2022
FTX later released a statement clarifying that it does not own BTC Africa and its subsidiaries.
Press release: Clarification about certain entities not included in Chapter 11 filing. pic.twitter.com/rxmY2f2iTB
— FTX (@FTX_Official) 12 November 2022
In April this year, FTX entered into a partnership with AZA Finance to roll out its digital asset services in West Africa. The plan, according to s Bloomberg the report, should launch the services within a few months, and gradually spread across the continent over the next two years from that point.
However, the collapse of the once-beloved exchange means that this plan for Africa may never materialize.
