Nigerian platform integrating music streaming with social networking, Astrotwig has alleged a loss of $20,000 to Mr. Simon Tiwari, an angel investor who pledged a convertible loan of $1 million in their pre-seed round.
The startup reportedly secured funds through loans from friends and family. Facing the financial setback, Astrotwig initiated a crowdfunding campaign to repay lenders or potentially face legal consequences, having gathered approximately ₦345,000 ($227) at the time of their public statement.
Following an investigation into the scam, CEO Samuel Adeleke stepped down. Adeleke connected with the investor through a Twitter post seeking a $500,000–$1,000,000 SAFE investment, prompted by Tiwari’s claim of having witnessed Astrotwig at a MIDEM pitch event and offering the full $1 million for their 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.
The decision to transfer the funds through Bitcoin was made by both parties, influenced by the unstable foreign exchange situation in Nigeria.
Adeleke, in his post, revealed that the investor directed the company to send a $20,000 test transaction in Bitcoin as collateral to facilitate the $1 million loan transfer. To fulfill this requirement, they reportedly gathered loans from friends and family.
Initially deposited into a newly created cryptocurrency wallet, the funds were later moved to a Mycelium wallet at Tiwari’s insistence, as he claimed it was the preferred platform for investments. Mycelium Wallet, a non-custodial wallet, provides users with a higher level of anonymity by concealing details such as IP addresses that could be used to trace devices. Tiwari also provided a QR code for the test transfer.
“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 taken steps to replace its CEO, who was primarily responsible for most interactions, following the filing of an official police report regarding the incident. Adeleke, a final year student at the Federal University of Akure in Nigeria, co-founded the social music streaming app with his friends, Ajibola Disu and Oluwaseun John.
The app allows users to share their current music preferences, host online listening parties and music discussions, as well as post song clips and opinions.
With a claimed user waitlist of just over a thousand, Astrotwig launched the Beta version of its app in July 2023.
