Nigeria's Nestcoin held money from his investors on the battered FTX exchange

nestcoin, a Nigerian start-up, held money that investors applied to FTX, and is now planning to relieve a large part of his employees, since the failure of Sam Bankman-Frieds Krypto exchange around the world cascaded.

The group held a “significant” part of the stable coin investment, which it used for daily operation on FTX before the stock exchange application for bankruptcy on Friday, Nestcoin in a rel = "Nofollow noopener" target = "_ blank" href = "https://twitter.com/nestcoin/status/159214533501870082?s=20&t=6nop-qss5sblmdxrrpzh9a" Data-Trackable = "Link"> Letter to investors .

Nestcoin, an investor in crypto, games and digital art, collected $ 6.45 million with supporters in an early funding round, including Alameda Research, Bankman-Fried's trading business. The amount was the largest that was ever applied by a Nigerian start-up in such an early stage.

According to an investor who had been informed by the company, it held about $ 4 million of FTX, which represents almost all remaining means it had applied. The group rejected a statement, but the investor's letter said that Nestcoin did not yet have customer assets.

The problems with Nestcoin are the latest signs of the width of the damage caused by the crisis caused by FTX, which was "wild west".

According to the current and former employees, Nestcoin is released at least half of its almost 100 employees due to the FTX emergency. Other employees are offered an eight to ten-week vacation program that is paid as required. The employees remaining in the company receive a salary reduction of around 40 percent, while CEO Yele Bademosi does not receive compensation.

nestcoin also tried to assure its investors that customer finances were secure and said in the investor update that the products that it had published, "naturally defi protocols and not kept and we have therefore never kept customer funds and this incident has no financial effects on our customers".

ftx and Alameda Research invested in other African start-ups last year. Chipper Cash, a transfer company based in Kenya, collected $ 150 million in an assessment of $ 2 billion last year, led by FTX and nameless investors.

Mara, another Kenyan crypto startup, collected $ 23 million from Alameda, Coinbase and others. Mara said in May that it would be the “official crypto partner” of the Central African Republic, the small nation plagued by conflicts with 5 million inhabitants that Bitcoin introduced as a legal means of payment at the beginning of this year. In August, the country's highest court declared most of the programs carried out as part of the Bitcoin program, for unconstitutional, including the acquisition of citizenship.

An experienced investor in African start-ups said that FTX's promise to perform to these start-ups was his name. "It's all part of the crypto religion," said the investor. "A brand like FTX on the [List of Investors] made it look like you were anointed. I mean, this guy was on the cover of Forbes."

This investor said that the start-ups, the equity of Alameda, took up part of their wealth at FTX like Nestcoin. In his investor update, Nestcoin said that the participation of Alameda is less than 1 percent of the group's equity.

nestcoin describes itself as a company that "democratizes access to economic opportunities for ordinary people in border markets". The company has investments, including Breach, a media company that hoped that it would help people understand and accept crypto, and MVM, a crypto gaming community. Bathroom was previously a manager in the risk capital unit of Binance.

The layoffs are expected to affect the employees employed in these other groups. Nestcoin invested in other African crypto startups such as LazerPay, which processed crypto payments.

aanu.adeoye@ft.com