Nigeria-based Web3 and crypto-focused company, Nestcoin has disclosed that it is downsizing its workforce as part of efforts to cushion the effects of the FTX collapse on the company.
Last week, FTX went from being the world's third-largest cryptocurrency exchange to filing for Chapter 11 bankruptcy in Delaware. The sudden and rapid downfall of FTX came after the company—facing a liquidity crisis—agreed to sell itself to rival Binance for an undisclosed amount. Customers fled the exchange after becoming concerned about whether FTX had sufficient capital.
However, Binance, the world's largest crypto exchange, backed out of the non-binding deal after taking a look at the books of FTX, at which point it became clear that the smaller exchange’s problems were too big to solve.
FTX's CEO Sam Bankman-Fried previously warned investors that without an imminent infusion of $8 billion in cash, the company may have no choice but to file for bankruptcy.
"Last week's events have had an impact on us, as we held our assets (cash and stablecoins) at FTX to manage our operational expenses. We were not undertaking any trading, but simply custodied our assets on the FTX exchange," Yele Bademosi, Nestcoin's co-founder and CEO, writes. "Unfortunately this means saying goodbye to some of our very talented Nesters (Nestcoin's employees' nickname)."
In February 2022, Nestcoin announced that it secured a $6.45 million pre-seed capital to accelerate crypto and web3 adoption. According to Bademosi, the company used FTX to save a "significant proportion of the stablecoin investment" it raised from Alameda Research—one of the investors in the round with less than 1% equity in Nestcoin.
The Lagos-based company stored these assets with FTX because it is a closely-associated exchange with the aforementioned investor. "While this is a challenging time for us and the industry as a whole—we see this as a wake-up call to focus on building a more decentralised crypto future where no one organisation or person can amass enough power to influence a nascent industry that has the potential to do good," Bademosi added.
Nestcoin disclosed that the FTX collapse does not have an "impact on our customers financially".
Founded in November 2021 by Yele Bademosi (CEO) and Taiwo Orilogbon (CTO), Nestcoin builds, operates and invests in web3 applications.
In its efforts to democratise access to economic opportunities presented by crypto and web3, Nestcoin has invested in Lazerpay to enable businesses to accept payment in crypto. Last November, the company collaborated with Davido and Bitsika to launch the E-choke social token.
Editor's Note: This is a developing story...