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- What the F*ck Happened to Unbanked??
What the F*ck Happened to Unbanked??
a surprising outcome for a popular crypto bank
Another crypto domino fell on Thursday, as Unbanked announced that it was winding down operations.
The neobank had launched in 2018, aiming to act as a bridge between the traditional fiat world and a rapidly growing crypto movement.
Unbanked offered Consumer & Corporate bank accounts that linked fiat money and crypto. Users could fund their accounts with crypto or fiat, and transact with an Unbanked debit card much like any other bank.
The neobank also offered up to 6% rewards on purchases, which they paid out in their own cryptocurrency UNBNK.
The company had the wind at their back for quite some time…
crypto was surging in both popularity & value
the company had amassed ‘hundreds of thousands of users’
generated over $10M in lifetime revenue
rated a ‘Top Deal’ on Kingscrowd, receiving a 4.9/5 rating
The company even secured an investment from Kingscrowd Capital just 3 months ago. The picture soured for Unbanked in recent months, beginning with their traditional bank partner breaking ties with the company. The crypto market began plunging, with many coins losing their value and industry players going insolvent.
Unbanked was also based in the US, and unfavorable crypto regulation had an adverse effect on operations. Unbanked specifically called this out in the following statement:
The death nail for the company was a fall-through in funding. The company had previously raised funds solely on the back of their customers, communities, and friends. In total, 6,000+ retail investors put $4M into the company.
According to Unbanked, the team was supposed to get an injection of cash earlier in the month:
Three weeks ago Unbanked signed a term sheet for an investment of $5 million dollars at a $20 million valuation that would allow us to not only continue operations but to expand. We have not received those funds as of this moment.
We are still optimistic that we will receive these funds; if we do – Unbanked will resume operations and will be stronger than ever. However, the money doesn’t count until it’s in the bank.
This term sheet would have been a significant writedown in valuation (-83%), but would have given the company a chance to re-orient operations and grow.
Ultimately this tale is a sad story, because it’s not rich people’s ‘play money’ being lost - it’s the hard-earned savings of every-day people. They should know what they’re getting into, startup investing is a high-risk investment class and I won’t sugarcoat it…but it’s still unfortunate to see so many retail investors take a loss.
For customers of Unbanked, it appears that all deposited funds will be returned as the company claimed to back all deposits 1:1.
For investors, the picture is much bleaker. Pending an unlikely cash infusion and miraculous turnaround, the value of their investment will most certainly be $0.
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