Source: Olumuyiwa Olowogboyega/ Techcabal

Leatherback, a cross-border payments startup, is the subject of ongoing speculation within high-level online communities of the Nigerian tech ecosystem. The UK-based company, which raised $10 million pre-seed, is backed by ZedCrest Capital and provides cross-border payment services to customers in South Africa, Egypt, Uganda, India, the UAE, and Nigeria.

An unsubstantiated report making the rounds on closed WhatsApp and Telegram communities claims that Leatherback lost a significant sum to an entity known as SDQ Facilitators–TechCabal will not describe the rumours in detail as they remain unsubstantiated. The initial source of the rumour also remains unclear.

Leatherback told TechCabal it is aware of the rumours and denied all the claims. In an exclusive interview with TechCabal, Leatherback’s CEO Toheeb Ibrahim also denied other rumours that transactions with SDQ Facilitators had exposed the fintech to an ongoing investigation that has left its bank accounts frozen worldwide. “[It’s] terrible and laughable,” he said. “Our accounts are fully functional, and you can log in right now, create an account and complete a transaction.”

Although Ibrahim denied any wrongdoing, losses or association with SDQ Facilitators, he said Leatherback has provided information on the former to the Nigerian Police Force and the Economic and Financial Crimes Commission (EFCC). While TechCabal could not independently verify the investigation details from the EFCC and the police, Ibrahim said, “We don’t know who they [SDQ Financials] are; we’ve not engaged them before, and we don’t have any links with them. If the authorities call at Leatherback, we’re inclined to respond; the extent of our investigation is to the extent the police have asked, ‘What do you know about these people?’ and we have provided those details to them.

“Hopefully, they can find whoever is involved, but none of Leatherback’s funds are affected in this situation,” Ibrahim added. The company also pointed out that it is subject to regulation by the UK’s Financial Conduct Authority (FCA) and that all client’s funds are safe.

TechCabal investigations turned up little information about SDQ Facilitators. The entity is incorporated in Nigeria, and details on the website of the Corporate Affairs Commission show one individual–Lawal Mohammed Kazeem–with significant control at the company. SDQ did not respond to TechCabal’s request for comments. Industry insiders told TechCabal SDQ is a Nigerian currency trading company that buys and sells the US dollar at a lower exchange rate than the prevalent parallel market value.

Last week, TechCabal reported that Float, a fintech company originally founded to help startups with cashflow management, dabbled into currency trading instead. In a series of transactions that eventually went wrong, the startup lost money and could not pay at least $6 million in client deposits. It shows the precarious nature of attempting to profit from Nigeria’s arbitrage situation.

With the greenback only readily available on the black market, some companies are tempted by promises of cheaper access to FX, but the results can be disastrous. A trader familiar with the situation but asked not to be identified so they could speak freely told TechCabal that the payoff for companies in currency trading was too much to be ignored. “A company I’m familiar with made N1.4 billion trading currencies in only one month,” they told TechCabal.

Leatherback said it is familiar with people’s attempts to get cheaper foreign exchange through third parties; “We always encourage people to stop dealing with intermediaries when they need foreign exchange.” As to why it didn’t respond to the rumors, the company said, “Leatherback’s accounts are open, the platform is open. Instead of responding to these rumors, if they tell you Leatherback accounts are down, please log in and find out if it’s working. If you log in and it’s working, everything answers itself.”

Source: Olumuyiwa Olowogboyega/ Techcabal