It’s at the peak of crypto optimism in 2021 when experts argued that Africans needed to participate in the crypto economy by creating products to educate a continent of young people on a future Web3 was sure to dominate. It is in such arguments, including many more from the early believers in the power of Africans to lead crypto innovation, that startups like Mara (CoinMara Inc.) were launched to “build Africa’s crypto economy.”
Conceived in 2021 by Chinyere ‘Chi’ Nnadi, Lucas Llinás Múnera, Kate Kallot, and Dearg OBartuin, Mara was a hit with investors. It raised $23 million from Alameda Research, the trading arm of FTX, Coinbase Ventures, and other 100 investors back in May 2022 at a pre-money valuation of $70 million.
What was a shocking turn of events, all within two years, Mara ran out of cash. The company’s CEO, Chineyere Nnadi, registered a new entity back in early 2024 under the name Jara. Two co-founders who left the company in early 2023 now claim that Nnadi set up a new company called Jara just to wriggle out of the liabilities that Mara incurred.
“Mara could have been something extraordinary, but its CEO took it down a dark and rotten path”, the co-founders wrote in a note to investors.
Chinyere Nnadi did not respond to numerous requests for comments for this story.
Mara Gets off to a Great Start Flush with funding in 2022, Mara started off on a strong footing, building a crypto wallet and a layer-1 blockchain that would be backed by Mara tokens. All was going well, by all indications, as the Mara Wallet made its way to market in February 2023, bringing with it “4 million verified users.” The company spoke highly of its community of users minting Mara tokens for educating others about crypto.
Like many of those startups that raised money at the height of the Zero Interest Rate Phenomenon in 2021, Mara incinerated cash at an extraordinary rate, according to internal documents that TechCabal has seen.
It lost $15.9 million in 2022, according to a copy of an audited financial statement sent to investors. It didn’t report revenue because it hadn’t launched a product in 2022—yet expenses were already astronomical. Mara spent $9.1 million on salaries, bonuses, and allowances. It had 130 employees, said one person with knowledge of Mara’s operations.
“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 wrote in an investor report, acknowledging the company’s cash burn during its growth phase.
Having balked down to just $5 million of cash left by the end of 2022, in 2023, Mara began talks to raise funding.
Failure to raise follow-on funding exacerbated issues
Mara’s timing could not have been any worst. The demise of ZIRP and the 2023 crypto winter made it hard to raise cash. The exit of three of Mara’s co-founders left basically only Nnadi running the company, and those exits spooked investors, one person claimed.
Talking to several investors for a possible $2-5 million raise nothing materialized.
Not having any new cash infusion only aggravated Mara’s financial problems. By June 2022023, Mara had already for the second time started reducing the size of its teams to cut costs and was seemingly on the brink of shutting down. According to one publication, generous staff salaries and expensive marketing campaigns were among the major drains on the firm’s resources.
It owed vendors who provided technical services like compliance and communications tools over $3 million, according to three people with direct knowledge.
Those creditors are now threatening Mara with a Chapter 8/11 involuntary bankruptcy claim, according to correspondence sighted by TechCabal.
Troubles for Mara Wallet also emerged, despite the claim of 4 million users.
“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.”.
Plagued with financial difficulties and an unpopular Mara Wallet, Nnadi reinstated the name and brand of a new cryptocurrency company: Jara. Fast forward to April 2024 and Maras was no more, there was Jara.
“Mara no longer exists,” continued an anonymous community manager on a message posted on Telegram, which asked the almost 10,000 users in the Mara Telegram group to download the user’s new app, Jara, a non-custodial crypto wallet. “The company investors are aligned with the new vision,” chimed its users.
Coinbase Ventures, one of its most high-profile investors, didn’t immediately respond to comment.
Nnadi reportedly offered to move both the equity which Mara’s institutional investors obtained and the tokenized shares of close to 100 individual investors to Jara. He later said that he had pumped $700,000 of my money in Jara.
He told investors that the idea of the rebrand to Jara was in order to “leave in the past the shoddy engineering work of the past and be more authentic to how Africans transact.” He also alluded in another memo that an employee recruited to work on the over-the-counter trading product had embezzled $600,000 of the company’s first OTC transaction.
Former executives at Mara say they were concerns, though, that may blight Jara’s new start—alleging that Nnadi spent company funds with little oversight and questioning how money was spent.
While the directors of the company took home a total of $2.6 million, details of how much each of them pocketed cannot be established from the financial statement of 2022, but the report indicates that Nnadi was not left out of the big pay. Of the five C-suite executives of the company excluding Nnadi, three pocketed $170,000 each while the fourth pocketed $120,000, and a fifth of the executives pocketed $600,000 annually. The five executives thus pocketed a total of $1.23 million, leaving Nnadi as the only executive whose pay was undisclosed to pocket as much as $1.3 million.
There are also questions around $500,000 donated to Mara Foundation, the startup’s non-profit arm. “The Swiss government has formally launched action against the Mara Foundation,” one former executive wrote to investors. TechCabal could not independently verify that claim.
At least two former executives also claim creating Jara is a way to avoid Mara’s liabilities.