Mara, a crypto startup backed by Coinbase, suffered a $16 million loss in 2022 due to leadership issues and financial mismanagement. The transition to a new entity, Jara, raises questions about the company’s future and unresolved liabilities.
In 2021, during the peak of cryptocurrency optimism, Mara (CoinMara Inc) emerged as a promising pan-African exchange, aiming to build Africa's crypto economy. Founded by Chinyere ‘Chi’ Nnadi, Lucas Llinás Múnera, Kate Kallot, and Dearg OBartuin, the startup quickly attracted investors, raising $23 million in May 2022 from Alameda Research, Coinbase Ventures, and others.
However, by early 2024, Mara had exhausted its funds. CEO Chinyere Nnadi established a new entity, Jara, which former co-founders claimed was a tactic to evade Mara’s liabilities. "Mara could have been extraordinary, but its CEO took it down a dark and rotten path," they said in a note to investors. Nnadi did not respond to requests for comment.
Initially, Mara showed great promise. In February 2023, the company launched Mara Wallet, boasting 4 million verified users and a community rewarded with Mara tokens for educating others about crypto. However, like many startups from the Zero Interest Rate Phenomenon (ZIRP) era, Mara burned through cash quickly. Internal documents revealed a $15.9 million loss in 2022, with no reported revenue due to the delayed product launch. Salaries, bonuses, and allowances accounted for $9.1 million of expenses, with 130 employees on the payroll.
Despite attempts to raise additional funds in 2023, Mara faced significant challenges. The end of ZIRP, the 2023 crypto winter, and the departure of three co-founders deterred potential investors. By mid-2023, Mara had downsized twice and struggled to stay afloat, reportedly owing over $3 million to vendors.
Complicating matters further, Mara Wallet's user base was plagued with fraudulent accounts. A former executive estimated that 75% of the reported users were fake. Amid these issues, Nnadi registered Jara, and by April 2024, Mara ceased to exist. Users were directed to the new Jara app, and investors were promised equity transfers.
However, former Mara executives raised concerns about financial oversight and questioned the use of company funds. The 2022 financial statement revealed directors earned a combined $2.6 million, but Nnadi’s salary remained undisclosed. Additionally, $500,000 donated to the Mara Foundation is under scrutiny by the Swiss government.
Despite Nnadi's assurances that Jara would rectify past mistakes, former executives believe the new company is merely a means to sidestep Mara's liabilities.
Source: TechCabal
