Following the collapse of the FTX crypto exchange platform which has negatively impacted several companies across the globe, Nigerian Web3 startup Nestcoin has been forced to lay off part of its workforce.
The one-year-old startup disclosed it used the FTX platform as a custodian to store a significant proportion of its investment, which has seen its assets held due to the collapse, noting that it necessitated the firm to downsize its workforce to be able to manage its operational expenses.
The startup CEO Mr. Yele Badamosi took to his Twitter handle to inform investors about the firm’s next move, which he shared via a statement.
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An update shared with our investors earlier today on the FTX incident and its impact on @Nestcoin. pic.twitter.com/0Mjo4SYF7R
— YB ? ? ? (@YeleBademosi) November 14, 2022
The statement reads in part,
“Dear investors,
“We are reaching out to share an update on the FTX incident and its impact on Nestcoin. Last year, Nestcoin raised capital from a range of investors, including Alameda Research.
“For context, Alamanda’s equity is less than 1%. We used the closely-associated exchange, FTX, as a custodian to store a significant proportion of the stablecoin investment we raised- i.e our day-to-day operational budget.
“However, 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.
“While there are uncertainties, including the outcome of our assets held at FTX, we as a company have to adjust our plans, rethink our strategy and take steps to better position ourselves for the future.
“Unfortunately, this means saying goodbye to some of our very talented nesters. 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 decentralized crypto future where no one organization or person can amass enough power to influence a nascent industry that has the potential to do good.
“In the past few days, I’ve strengthened my resolve and remain committed to “doing crypto” in line with its true spirit and founding ethos.
“At Nestcoin, we have a renewed sense of purpose — we realize that for crypto to truly go mainstream, we must accelerate the transition to self-custody by building compelling trustless crypt products. To succeed, we will remain relentless, resourceful, and flexible as we navigate these hard times.
“We thank you for your support and strategic advice so far. As always, if you have any questions please feel free to reach out to me directly at [email protected]”.
While the firm has made the move to reduce part of its workforce, reports reveal that the remaining team members will have their salaries slashed by 40%.
Nestcoin builds, operates, and invests in web3 applications, which is funded by 20 investors, and has raised a total of $6.5 million in funding over 1 round, which was a pre-seed round raised on February 2022.
The collapse of the FTX crypto exchange platform which has already filed for bankruptcy has negatively impacted a large number of people and organizations which has seen them lose a substantial amount of cash.
It has also affected the cryptocurrency market, as the price of cryptocurrencies plummeted at the news of the collapse. Bitcoin lost more than 8% in value which saw it trade at $18,000 mark, while Ethereum tumbled by more than 16% to $1,200.
It has been predicted that the prices of crypto could end up plummeting below $10,000 before the end of the year, due to concerns from investors.