- The Cardano stablecoin project, Ardana, which went out of business in November 2022 is back on the news.
- According to a Web3 risk management, Xerberus, a large percentage of the investors’ funds were transferred to a Target Wallet which belonged to the CEO of the crypto firm
- This news is likely to bring to the fore the crypto firm’s alleged hidden secrets and may be a reason for possible legal action against Ardana Labs.
Ardana Labs (Ardana) is a decentralized stablecoin and DEX liquidity pool built on Cardano based in London, England, United Kingdom. According to data from Crunchbase, Ardana has raised approximately $10.7m USD in funding through three rounds. The first round was in August 2021 where $ 2.7 m was raised in seed capital, the second round was on October the 15th where $6.56 was raised in seed capital, and October 28, 2021 where $1.5m was raised in Initial Coin Offering
In 2021, the same year it raised $10.7m, Ardena Labs claimed it was going to provide an innovative platform for the Cardano network; an open-source blockchain platform powered by cryptocurrency tokens and widely used to host globally decentralized applications (DApps) and systems.
The new project was to be known as Ardana and was going to allow investors to lock up crypto collateral and mint fiat-pegged stablecoins including dUSD which is pegged on the U.S. dollar among other stablecoins
Possible reason behind the failure
However, in November 2022, the crypto firm closed shop suddenly. Funding and uncertainty with timelines were given as plausible excuses. This was majorly accepted by investors who assumed the crypto downtime of 2022 affected Ardana Labs as well.
New evidence has now emerged from Xerberus; a Web4 risk-management platform which seems to suggest that Ardana’s executive may have transferred a large amount of the investors funding to a personal wallet after an attempt at obscuring the trail was made. This transfer was likely made or authorized by CEO Ryan Motovu or some other C-level team members of the crypto firm.
According to the Risk Management platform, once the funds were safely deposited in this private wallet, the executives made a series of bad crypto investments which resulted in a loss of approximately $4 million leading to the ultimate collapse of the firm.
Ardana came to light in mid-2021, and in a span of 2 months, had raised over $10 million from Venture Capital firms CFund, Three Arrows Capital (3AC), and Ascensive Assets. Because of the strength of its backers, Investors believed that their new token, DANA, was going to over-deliver. However, this was never the case as the crypto firm start-up closed down without a product.
There was a lot of smokescreens during the time in which Ardana Labs chose to close down, because FTX also closed down around about the same time, and one of the venture capitalists who had backed Ardana had closed down 3 months prior. The crypto firm was able to take off in the cover of the “crypto winter” and disappear without raising an eye brow.
Xerberus gives series of steps that Ardana took to move funds, first to a proxy wallet, where stablecoins were swapped for CVX; a utility token used to receive fees from the Convex Finance platform. From here the funds were sent to an old address which belongs to Ardana founder Motovu within minutes. It was this wallet where funds were lost through poor investment decisions ultimately causing the collapse of Ardana.
Xerberus urged that it had tried its level best to establish that the funds raised were moved to different addresses and ultimately ended in the address of the CEO, but it can not prove that with certainty as it is not a ledger trail, neither is it a blockchain exact trail. But they have predicted with a certain level of accuracy that $7.2 million ended up in the Target Wallet which also happens to belong to the founder of Ardana.
$10 million in sunk capital but lost without a trace or a functional product is a stark reminder of the danger of investments in Web3 startups without track records.