Astrotwig, a Nigerian platform that combines music streaming with social networking, claims that it lost $20,000 to Mr. Simon Tiwari, an angel investor who offered to invest a convertible loan of $1 million in their pre-seed round.
The fledgling startup said it raised the money from loans from friends and families. They are currently running a crowdfunding campaign to repay our lenders or otherwise face legal action. At the time the company issued a public statement, they had raised about ₦345,000 ($227).
After an investigation of the scam, which the company claims happened on February 10, Samuel Adeleke, the CEO of the company, stepped down.
Adeleke said he came in contact with the investor after he put out a Twitter post about looking for a $500,000–$1,000,000 SAFE investment.
The angel investor claimed to have seen Astrotwig at a MIDEM pitch event and offered to invest the entire $1 million they were seeking for our pre-seed round as a convertible loan.
“Subsequently, due diligence was conducted, and the necessary documentation was signed. The agreed-upon funding was scheduled to be received on Sunday, February 11, 2024,” the public post read.
Both parties decided to transfer said investment via Bitcoin. ” due to the unstable foreign exchange situation in Nigeria.”
According to Adeleke’s post, the company was instructed by the investor to send a test transaction of $20,000 in Bitcoin as collateral to facilitate the transfer of the $1 million loan. They reportedly pooled took loans from friends and family, to fulfill this request.
Adeleke and his cofounder deposited the cash in a newly created cryptocurrency wallet, but upon Tiwari’s insistence, the funds were moved to a Mycelium wallet, which he claimed was the preferred platform for investments. Mycelium Wallet is a non-custodial wallet that allows users to maintain a high level of anonymity by veiling details like IP addresses, which can be used to trace devices.
He also provided a QR code for the test transfer to be made.
“As instructed, a small test transaction of $19 was sent, but upon scanning the provided QR code, $19,300 was immediately deducted from our wallet.” The company claims that it was only at that moment that they realised that it was a “ sophisticated scam.”
Astrotwig has now replaced the CEO, who handled most of the interactions. An official police report has been filed regarding the incident.
Adeleke, who is also a final year student at the Nigerian university, the Federal University of Akure, co-founded the social music streaming app with his friends, Ajibola Disu and Oluwaseun John. The app enables users to share what they are listening to, and host listening parties and music discussions online. It also allows people to post clips of songs and their opinions about them.
Astrotwig, which claimed to have a little over a thousand users registered on its waitlist, launched a Beta version of the app in July 2023. Since its launch, the company has not made any posts about the platform until this announcement about the scam.