Pan-African crypto company, Mara, founded by Chinyere ‘Chi’ Nnadi, Lucas Llinas Munera, Kate Kallot, and Dearg OBartuin in 2021, which made headlines in 2022 when it raised $23 million in one of the biggest Web3 raises on the continent, has recently rebranded to Jara as CEO, Chinyere ‘Chi’ Nnadi, tries to keep the company alive.
[TECH] Mara Raises $23 Million to Advise Central African Republic on Crypto Adoption: Mara,a team building several crypto products with Africa first in mind, has raised $23 million in funding to go towards t.. https://t.co/aHSyKabsxK via @BitcoinKE
— Top Kenyan Blogs (@Blogs_Kenya) May 12, 2022
According to a new investigative report by TechCabal, by April 2024, and in a span of just two years, Mara had ran out of cash and had ceased to exist with customers being asked to download the new Jara app, said to be a non-custodial crypto wallet.
“Mara no longer exists,” said a Telegram message from an anonymous community manager to the 10,000 accounts in the Mara Telegram group.
“The company’s investors are aligned with the new vision.”
Nnadi offered to transfer the equity of Mara’s institutional investors and the tokenised shares of nearly 100 individual investors to Jara while claiming he invested $700,000 of his funds into Jara.
According to the CEO, rebranding to Jara would allow them to move away from the ‘shoddy engineering work of the past and be more authentic to how Africans transact.’
“We [paid high salaries] to attract talent [from well-paying companies like Apple and competitors like Yellow Card] but they didn’t always deliver,” Nnadi reportedly wrote in an investor report, acknowledging the high burn rate during its growth phase.
In a separate memo, he also claimed an employee hired to work on the over-the-counter trading product stole $600,000 from the company’s first OTC transaction.
The company, which laid off approximately 85% of its employees in June 2023, is also in the throes of a fallout among its founding team. Former executives claim Nnadi spent company funds with little oversight and question how money was spent.
Two of the Mara Co-Founders reportedly claim that the establishment of the new company, Jara, is to enable Nnadi avoid responsibility for Mara’s liabilities.
“Mara could have been something extraordinary, but its CEO took it down a dark and rotten path,” the two co-founders said in a note to investors.
In 2022, Mara reportedly lost $15.9 million according to audited financial statements sent to investors, out of which, $9.1 million went to salaries, bonuses, and allowances to its 130 employees.
With only $5 million left by the end of 2022, Mara began fundraising talks in 2023. The end of the Zero Interest Rate Phenomenon (ZIRP) in 2021, coupled with the 2023 crypto winter made it difficult to raise funding.
In addition, the departure of three of the other co-founders spooked investors, according to the report claims.
2022 Mara financial statements reportedly showed directors earned a combined $2.6 million. Of the C-Suite executives, excluding Nnadi, three earned $170,000 each with a fourth earning $120,000 and another arning $600,000 annually. The combined earnings amounted to $1.23 million, suggesting Nnadi, whose salary was the only one not disclosed, may have earned $1.3 million in 2022.
About $500,000 was donated to the Mara Foundation, the non-profit arm of Mara. However, there are questions about the Foundation as well.
“The Swiss government has formally launched action against the Mara Foundation,” one former executive wrote to investors.
The 4-million-users claim of its Mara wallet has also been put into question.
“At least 75% of the 4 million verified users Mara reported it had were fraudulent accounts,” one former executive said.
“The financial incentive of the company’s referral program encouraged users to create fake Mara wallet accounts.“
The company also allegedly owed vendors, who provided technical services like compliance and communications tools, over $3 million.
Those creditors are said to be considering a Chapter 8/11 involuntary bankruptcy claim against the company.
________________________________________
