No one or entity is safe from scammers, and that notion has been painfully rekindled by the Nigerian startup Astrotwig. The young Nigerian music and social network startup lost $20,000 to a scammer who posed as an investor when the company was seeking funding.
The Astrotwig scam story
Earlier this year, Astrotwig with the directions of its CEO at the time Samuel Adeleke made a tweet about seeking a $500,000 to $1 million Simple Agreement for Future Equity (SAFE) pre-seeding investment.
Then comes the scammer named Simon Tiwari, posed as an investor sent from heaven who wants to take the entire bill up by himself. He claimed to have come across the company at a MIDEM pitch event and was interested in investing $1 million in the company.
As excited as the executives of Astrotwig were, discussions were conducted, deals were struck, and paperwork was properly documented. To complete the transaction, it was necessary to send the investment to the company, and that is when things started moving sideways.
The $1 million transaction was scheduled to occur on 11 February 2024 and through Bitcoin. The reason for the use of Bitcoin in this transaction was because of the unstable fluctuations in the exchange rates in Nigeria.
Critical Thinking out the window
On the day of the transaction, according to Adeleke, Tiwari demanded that before he could send the $1 million loan to the company, they would have to send a test transaction of $20,000 as collateral.
To get this seed funding into the company, they had to get loans from family and friends, which they succeeded in doing.
When it was time for the transaction, the CEO and Co-founder went ahead to use a new cryptocurrency wallet for the transaction, but the investor scammer also demanded that the company use a Mycelium wallet.
A Mycelium wallet is a non-custodial wallet that prioritizes user anonymity by enabling them to hide their IP addresses perfectly for untraceable transactions.
The scammer provided a transfer QR code, which the company initiated a $19 test transfer, but upon scanning the QR code, an additional $19,300 was debited from the wallet.
At this moment, it dawned on the CEO that this was a scam and the matter was reported to the police.
Shortly after, the CEO, Samuel Adeleke, resigned from his position and the company is now soliciting funds to pay back its lenders and avoid further legal issues.
Currently, Astrotwig has successfully raised $227, which is not even close to a quarter of the amount lost.