A consortium of investors sent a letter to Astra Protocol outlining what they said are serious concerns about the business and its ASTRA token, calling for a meeting with management within 48 hours or the concerns would be made public, according to a copy of the letter obtained by CoinDesk.
The Switzerland-based Astra Protocol offers a platform with Know-Your-Customer (KYC) and Anti-Money Laundering services. The company has garnered attention with its stacked advisory board, which includes former corporate president and chief strategy officer of Samsung, Young Sohn, former acting White House Chief of Staff Mick Mulvaney, former Secretary for Homeland Security Kirstjen Nielsen, and former European Commissioner for Trade Phil Hogan.
A person familiar with the situation told CoinDesk that the letter was sent to Astra on June 11, meaning the warning period expired on June 13.
The investors highlighted movements of the ASTRA tokens they characterized as suspicious. “Our most pressing concern, however, pertains to token movements. The address associated with the creation of the Astra token repeatedly transfers substantial sums to CEXs, suspiciously timed just prior to new announcements and invariably followed by a significant drop in token price. The explanations thus far provided for these events are nebulous and unsatisfactory,” wrote the consortium in the letter addressed to Astra Protocol co-founders Damien O’Brien, Jez Noah Ali, Arthur Ali and the broader Astra team.
The names signed in the letter included Shima Capital, Huobi, Moonlight Capital and Republic among others. A Shima Capital spokesperson confirmed the legitimacy of the venture capital firm’s signature on the letter. Shima Capital declined to comment if any talks took place with the investors following the expiry of the warning period
Republic and Astra were previously involved in a disagreement over whether the former had purchased ASTRA tokens, which played out in CoinDesk coverage of the supposed deal.CoinDesk reached out to Astra Protocol for comment but had not received a response by publication time.
List of concerns
A core concern of the investors revolved around the protocol’s lack of engagement with its investors, according to the letter.
“In our collective experience, we have seldom encountered an enterprise that exhibits such blatant disregard for investor communication, inclusive of ignoring inquiries and haphazardly canceling scheduled meetings,” the consortium claimed in the letter.. “The dismissive approach when investors raise valid concerns or ask penetrating questions is deeply unsettling,” the letter added.
The investors claimed the group had previously tried to engage with Astra repeatedly to resolve the issues, without success, leading them to send the letter. “Despite our repeated and unrequited attempts to engage you in resolving these concerns, we find ourselves obligated to make one final joint appeal, urgently demanding action,” the letter said.
Aside from the lack of engagement, investors expressed other concerns regarding strategic decisions such as a sudden six-month extension to the cliff (the period after which investors can gain full access to their invested equity) for all investors, which the investors claim was designed to exhaust the liquid token supply. The group notes that the ASTRA token price sits well below the price that investors paid with no apparent signs of a recovery. ASTRA was trading up nearly 60% to $0.02835 in the past 24 hours at the time of publication.
The investors also question a series of announcements and promises that appear “misleading and deceptive” as they have “either failed to materialize or have been announced solely by Astra, without third-party confirmation.” Examples include Samsung joining as an Astra investor and partner, KPMG, utilizing Astra’s compliance technology, and the listing of ASTRA on Binance along with the integration of Astra’s technology across Binance’s Middle East and North Africa regions.
The letter ends with a request for a joint call within 48 hours to discuss the concerns in detail: “Failure to comply with the request will leave us with no recourse but to initiate a joint publication airing our concerns about the project and its team.” CoinDesk has no knowledge of whether any talks took place during that time.
