Co-founders of FTX-backed Bridge Network part ways after power struggle

by MMC
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The three co-founders of web3 startup Bridge Network have parted ways after a struggle for control of the company. They have raised over $3.8 million from several investors, including FTX.

Two co-founders of Bridge Network, a web3 startup supported by FTX, left the company after a management conflict. The conflict centered on control of the company and a disagreement over access to the company’s bank accounts. Kimberly Adams, the founding director, and Favor Uzoaru have left the startup, leaving Samuel Eke, the third co-founder and former chief technology officer, as the company’s CEO.

Samuel laid off nearly two dozen employees shortly after becoming CEO of the company. He transferred the operational funds to a new crypto wallet, which triggered an investigation by the Nigerian Economic and Financial Crimes Commission (EFCC). “The EFCC investigated the matter and exonerated me because the matter was civil and not criminal,” Samuel told TechCabal. He said the layoffs were necessary because the company was short on cash. Kimberly and Favor declined to comment on the matter.

Bridge Network was founded in 2021 after Kimberly shared the idea for a solution that would allow people to move digital assets from one blockchain to another with her co-founder, Favour. They connected on a discussion forum on the social audio platform Clubhouse. At the time, Favor was working at BuyPower, a YC-backed fintech company, and was apparently looking to start his own tech startup. Two sources said Favor recruited Samuel, who was able to write code in Solidity, a programming language for developing blockchain applications. He also recruited a product designer to join the team. Together, the four-person team worked on the minimum viable product for Bridge Network.

The Barbados-based startup has raised more than $3.8 million from FTX and around 50 other investors. Its main product was Token Bridge, which enabled interoperability between various blockchain networks, allowing cryptocurrency users to transfer their digital assets seamlessly across the networks. The startup was also developing NFT Bridge and Bridge Pay. NFT Bridge allows users to transfer non-fungible tokens (NFTs) across blockchains while Bridge Pay is a non-custodial, multi-chain payment tool that allows users to connect Web3 wallets to virtual or physical fiat debit cards to spend their assets in the real world. The payment solution was focused on Emerging Markets.

In an email seen by TechCabal, the company’s former COO called the dispute a “well-coordinated palace coup,” saying Kimberly tried to force him and Samuel to to leave the company. In February, Kimberly tweeted that she left the startup “due to differences between the co-founders and myself on how the project should be run.”

The use case for Bridge Networks is compelling. The company’s Token Bridge allows users to easily move an asset from one blockchain to another. This is increasingly important as the number of blockchain networks reaches into the thousands. Given the high cost of moving assets across a blockchain, Bridge offered access to cheaper alternative blockchain networks. But the startup is struggling to gain traction. A source with knowledge of the company’s figures said it had averaged 1.3 million transactions in three months. “But when Bridge finally launched it, it was only seeing 600 to 1,000 transactions per day,” the source told TechCabal.

As the company struggled to gain traction, sources said Kimberly’s confidence in her team, which numbered about 25 people, declined. According to a source who worked at the company, “she took a hit, calling all employees ‘incompetent’ and low quality.” It is unclear whether his claims were true. While Samuel, the CTO, wrote in his public profile that he had years of experience as a software engineer, he only spent four months working in a blockchain-related role before joining Bridge Network. According to the same sources, Favor and Kimberly have sometimes discussed the possibility of replacing Samuel as the company has experienced delays in the development of other products, NFT Bridge and Bridge Pay.

Another source close to Kimberly told TechCabal that it was Favor that Kim wanted to leave. “The only person who contributed significantly to the project was Samuel. The only thing Favor did was connect Kimberly to Samuel,” the source said.

The dispute escalated in December 2022 when Kimberly requested Favor’s signature to revoke Samuel’s access to the company’s multi-signer account, where the startup’s USDC assets were held. In an email to investors, Favor said he thought it was unfair to take such a step without first discussing it with Samuel, and so he declined. He also informed Samuel of the situation.

Subsequently, Kimberly demanded that both co-founders step down. In a letter to investors, Favor claimed she blocked him from accessing his work email and company tools. She also deleted Samuel’s AWS account from the backend, causing the Bridge app and website to go offline temporarily.

In January 2023, Kimberly told at least one investor that she had asked one of the co-founders to resign to reduce the burn rate. At the time, the price of Bitcoin had fallen 75% from its 2021 all-time high, and Bridge Network’s notable investor, cryptocurrency exchange FTX, had collapsed, weakening confidence in the market of cryptography. Kimberly told investors in an email seen by TechCabal, “This decision has caused a ripple effect that brings us to this point,” referring to the ensuing dispute between her and her co-founders.

An investor who asked not to be named told TechCabal: “On the one hand, Favor was sending (investor) emails from (his personal email account) saying that Kimberly was trying to kick him and Samuel out . On the other hand, Kimberly told me that they were trying to force her out of the company.

Kimberly resigned as director of Bridge on January 9, but reversed her decision the next day, citing concerns that her two co-founders would not be able to cope with the pressure of running the business. One of his emails to investors said: “My co-founders have since spent over $100,000 of company funds on legal fees, which I did not approve of. These procedures damaged our cash flow, but not my passion and my dynamism. I’m ready to rebuild and move on once this is sorted.

Kimberly continued to negotiate with Favor and Samuel, who reportedly demanded $560,000 in severance if they left the company. They later reduced their request to $340,000. Kimberly reportedly made a counteroffer of $266,000, which included $116,000 in legal fees, but Samuel and Favor refused. A source familiar with the matter told TechCabal that Favor and Samuel never held any equity in the company.

With attempts to reach an agreement stalled, Kimberly ultimately left the organization in February. Some investors aware of the events began to request reimbursement of their investments. Kimberly declined to comment on the matter. But Samuel insisted investors had no right to seek refunds. “They purchased the company’s token (BRDG), so we were not obligated to issue refunds, but just obliged them out of goodwill,” Samuel told TechCabal. Bridge Networks raised funds through a Simple Agreement for Future Token (SAFT). A SAFT is a contractual agreement entered into at the time of a token launch, creating ownership rights for token investors at a later date.

Samuel, the co-founder who emerged victorious from the internal dispute, told TechCabal: “We are still building, but the company has reimbursed investors who demanded repayment following the resignation of my co-founders. » Although none of the founders indicated exactly how much would be repaid to all investors, Samuel pointed out that the legal battles and repayment of investors have left a big hole in the company’s finances. And with investor interest in Web3 waning, fundraising will likely be difficult.

After attempting to raise more money from investors in April, Favor stepped down as co-founder and COO to work on other personal projects. Samuel insists that the company is still in business and users can expect the launch of new features like the NFT Bridge soon.

However, a user on the Bridge Network Telegram group said: “The last time the developer made a comment here was during the AMA (Ask Me Anything) session six months ago. » The domain name of the company’s website has also expired. In September, cryptocurrency exchange MEXC, which facilitates the trading of digital assets, delisted the startup’s token, BRDG. In a message to the Telegram channel, Samuel assured users that he was talking with potential investors to turn the situation around.

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