FTX’s Collapse Troubles African Fintech Firms

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The collapse of the once beloved cryptocurrency exchange, FTX, is impacting some fintech companies in Africa.

Days after FTX filed for Chapter 11 bankruptcy protection in the US, Nestcoin, a Nigerian web3 startup has announced that it is laying off some of its employees because the company held its assets (money 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 range 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 proportion of the stablecoin investment we raised – ie our daily operating budget,” Yele. Bademosi, the Founder of Nestcoin explained in a statement shared on Twitter.

Nestcoin further clarified that it was not engaged in any business “but simply guarded our assets on the FTX exchange.”

Financial Tycoons in February reported that the Nigerian company, whose portfolio includes crypto educational media, a gaming guild and a blockchain-based payment gateway, raised $6.45 million in a funding round that saw the participation of Alameda Research and tennis star Serena Williams of Serena Ventures. .

Other FTX Investments in Africa

However, Nestcoin is just one of a handful of African startups that have received financial support from FTX and sister company Alameda Research. In November last year, Chipper Cash, an African fintech unicorn and cross-border payments company, raised $150 million in a Series C expansion round led by FTX. Additionally, Alameda Research also invested in MARA, an African-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 by Alameda Research, Coinbase Ventures and Distributed Global. Also, VALR’s US$50 million Series B funding round earlier in March this year enjoyed the participation of Alameda Research and leading venture capitalists. In addition, in February 2022, Jambo raised $7.5 million from Alameda Research and Coinbase to build Africa’s “web3 input portal”.

Although most of these firms have confirmed that they had zero exposure to FTX, eyes are on them, especially as events unfold after the collapse of FTX.

A hindered expansion into Africa?

In one of the latest developments in Africa regarding the collapse of FTX, the Bahamas-based crypto exchange has lost its Financial Service Provider (FSP) license in South Africa. This is because Ovex, a cryptocurrency based in South Africa, has removed the digital asset as its legal representative. The marketer in April last year raised R60 million (about $3.5 million) from FTX.

Meanwhile, TechCrunch reports that FTX was processing billions of dollars every month in Africa before it collapsed. 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 denounced the list of FTX of BTC Africa and 22 of its subsidiaries in its Chapter 11 bankruptcy. Elizabeth Rossiello, CEO and Founder of AZA Finance, explained that it only entered into a business partnership with FTX Africa to help expand web3 in Africa by building “regulated, secure and low-cost payment channels” for FTX.

The FTX later released a statement clarifying that it does not own BTC Africa and its affiliate companies.

In April this year, FTX entered into a partnership with AZA Finance to launch its digital asset services in West Africa. The plan, according to a Bloomberg report, was to launch the services in a few months, spreading gradually across the continent over the next two years of that time.

However, the collapse of the once-beloved exchange means that this plan for Africa may never come to fruition.

The collapse of the once beloved cryptocurrency exchange, FTX, is impacting some fintech companies in Africa.

Days after FTX filed for Chapter 11 bankruptcy protection in the US, Nestcoin, a Nigerian web3 startup has announced that it is laying off some of its employees because the company held its assets (money 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 range 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 proportion of the stablecoin investment we raised – ie our daily operating budget,” Yele. Bademosi, the Founder of Nestcoin explained in a statement shared on Twitter.

Nestcoin further clarified that it was not engaged in any business “but simply guarded our assets on the FTX exchange.”

Financial Tycoons in February reported that the Nigerian company, whose portfolio includes crypto educational media, a gaming guild and a blockchain-based payment gateway, raised $6.45 million in a funding round that saw the participation of Alameda Research and tennis star Serena Williams of Serena Ventures. .

Other FTX Investments in Africa

However, Nestcoin is just one of a handful of African startups that have received financial support from FTX and sister company Alameda Research. In November last year, Chipper Cash, an African fintech unicorn and cross-border payments company, raised $150 million in a Series C expansion round led by FTX. Additionally, Alameda Research also invested in MARA, an African-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 by Alameda Research, Coinbase Ventures and Distributed Global. Also, VALR’s $50 million Series B funding round earlier in March this year enjoyed the participation of Alameda Research and leading venture capitalists. In addition, in February 2022, Jambo raised $7.5 million from Alameda Research and Coinbase to build Africa’s “web3 input portal”.

Although most of these firms have confirmed that they had zero exposure to FTX, eyes are on them, especially as events unfold after the collapse of FTX.

A hindered expansion into Africa?

In one of the latest developments in Africa regarding the collapse of FTX, the Bahamas-based crypto exchange has lost its Financial Service Provider (FSP) license in South Africa. This is because Ovex, a cryptocurrency based in South Africa, has removed the digital asset as its legal representative. The marketer in April last year raised R60 million (about $3.5 million) from FTX.

Meanwhile, TechCrunch reports that FTX was processing billions of dollars every month in Africa before it collapsed. 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 denounced the list of FTX of BTC Africa and 22 of its subsidiaries in its Chapter 11 bankruptcy. Elizabeth Rossiello, CEO and Founder of AZA Finance, explained that it only entered into a business partnership with FTX Africa to help expand web3 in Africa by building “regulated, secure and low-cost payment channels” for FTX.

The FTX later released a statement clarifying that it does not own BTC Africa and its affiliate companies.

In April this year, FTX entered into a partnership with AZA Finance to launch its digital asset services in West Africa. The plan, according to a Bloomberg report, was to launch the services in a few months, spreading gradually across the continent over the next two years of that time.

However, the collapse of the once-beloved exchange means that this plan for Africa may never come to fruition.



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