Astrotwig, an early-stage music streaming platform, appears to have been the victim of an investment scam that cost its lenders and creators more than $20,000. CEO Samuel Adeleke has since resigned over the debacle.
Astrotwig a Nigerian Music Startup Loses Funds to Investment Scam
Founded in 2023 by Adeleke alongside Ajibola Disu and Oluwaseun John, Astrotwig blends social features with music streaming. Users can share listening activities, discuss songs, and host online listening parties.
After tweeting about their $500,000 to $1 million pre-seed raise target, Adeleke was supposedly contacted by US-based angel investor Simon Tiwari. Tiwari offered their full ask of $1 million as a convertible loan after allegedly seeing Astrotwig present at an industry event. Both parties agreed to send a test $20,000 Bitcoin transaction as collateral first, as part of regular due diligence and documentation. This Prelude would supposedly unlock the $1 million tranche.
Astrotwig combined loans from family members and friends to meet the requirement. Nevertheless, more than $19,000 much more than the $20 test amount was taken out of their cryptocurrency wallet as soon as Tiwari’s supplied QR code was scanned.
Company executives saw that this had all the makings of a sophisticated con. Tiwari had demanded that money be sent to the wallet site Mycelium through preferred investment methods, which focus on anonymity. He was then able to supply a fictitious address that almost completely removed the coins that had been placed.
The public nature of the affair has made accountability necessary. A temporary CEO is anticipated to be revealed soon after Adeleke resigned from Astrotwig amid the scandal. Regarding the scam, police reports have also been submitted.
Astrotwig Picking Up the Pieces Had to Launch an Emergency Crowdfunding Campaign to Pay $20,000 Debt
Now it’s up to Astrotwig to pick up the pieces. The firm was compelled to initiate an emergency crowdfunding campaign since it had to take on debt to pay the $20,000 fraudulent transaction. As lenders threaten legal action, they have raised roughly 15% of the targeted funds thus far.
Despite the company’s early success and ambition, this failed investment casts questions on Astrotwig’s continued existence. In a challenging environment for early-stage African entrepreneurs, its small team now has to regain funding and trust.
The lessons here reinforce earlier cautions about the dangers of cryptocurrency for startups. However, Astrotwig also succumbed to a more basic human manipulation that even experienced operators fall victim to. Such experiences should ideally cultivate stronger caution and self-preservation instincts throughout as Nigeria’s startup ecosystem develops.
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