Nestcoin CEO Yele Bademosi has revealed that the company has been impacted by the FTX collapse as its operational funds are currently stuck in the bankrupt crypto exchange.
Nestcoin kept some of the funds it raised during its investment rounds in FTX, according to a statement. Alameda Research, FTX’s sister firm, was an investor in Nestcoin’s $6.5 million pre-seed fundraising round in February.
“We used the closely-associated exchange, FTX, as a custodian to store a significant portion of the stablecoin investment we raised — i.e., our day-to-day operation budget,” Bademosi stated. A report by the Financial Times says this “significant portion” amounted to $4 million.
FTX has since collapsed after hating customer withdrawals a week ago. Reports have emerged over the past week of an $8 billion hole in the exchange’s balance sheet as well as allegations that the exchange diverted customer funds to help bail out Alameda.
Having lost access to the funds, Nestcoin says it will have to adjust its plans. These adjustments include letting go of almost half of its employees and implementing a 40% pay cut for the remaining workers. Some employees are also going to be furloughed for as long as two months. Bademosi is reportedly forgoing his compensation while the company navigates this period.
Bademosi, a former Binance director, established Nestcoin with Taiwo Orilogbon, formerly of Bundle Africa, in 2021. The company bills itself as a web3 gateway for Nigerians and Africans to access crypto sectors like NFTs, play-to-earn gaming, metaverse, and DeFi among others.
Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.