Fetch.ai called in administrators Resolve Advisory on Jan. 23 after the startup’s UK business ran into “financial difficulties” that made it impossible for the unit to “pay its debts,” the Evening Standard reports.
The decision came after Fetch.ai’s UK arm lost a case at the High Court in London in November. Fetch was ordered to pay a former contractor around £1 million (~$1.27 million) plus interest in damages.
The contractor’s claim included £750,000 (~$952,000) related to FET crypto tokens, the native currency of the Fetch.ai ecosystem, which remained unpaid as part of a software deal, the report says.
The price of FET fell over 10% to $0.5663 after the news, erasing about $50 million in the token’s market value. But data from CoinGecko shows the token has more than doubled in price over the past year, with a market capitalization of $590 million.
Also read: 10 Best-Performing AI Crypto Tokens of 2023
Rescuing Fetch.ai
Restructuring proceedings started late November, soon after the court ruling, but Fetch only appointed Resolve as administrators on Jan. 23, according to an official insolvency filing published in the UK on Tuesday, Jan. 30.
Resolve was called in “to find urgent rescue capital or to secure a sale of the shares, business, or assets” after the UK operations of Fetch ran into financial stress towards the end of 2023.
As part of the restructuring, the administrators sold the struggling UK business assets back to Humayun Sheikh, founder and CEO of Fetch, via a new UK-registered entity known as Assmbl.ai.
“After a wide marketing campaign, we…have achieved a sale of the business and assets of Fetch.AI, which is in the best interests of the creditors,” said Ben Woodthorpe, a partner at Resolve Advisory.
“With the rapid developments currently taking place in the world of AI, there is great scope for the business to thrive over the coming years.”
Sheikh, the Fetch founder, told the Standard that the UK business ran out of cash and was operating on borrowed money. “I have paid into the administrator £2.5 million personally,” he stated.
“It will be distributed to all the creditors, and whatever the administrator decides, they will pay. What I have bought is all the IP and the assets of the company. There is no avoidance here.”
Founded in 2017, Fetch calls itself an “open network for AI agents.” The platform is built on the Cosmos blockchain and uses AI to help people automate everyday tasks like booking a holiday or a flight. Fetch.ai focuses on use cases like optimizing DeFi trading services, smart energy grids, travel, and even city infrastructure.
Business as usual
Fetch’s latest financials, filed with the UK government agency Companies House on May. 31, 2023, showed a loss of £16.7 million (~$21.17 million). The startup wrote down the value of its assets (made up mostly of FET tokens) from £278 million (~$352.52 million) to just £20 million (~$25.36 million) after the token plunged in price between 2021 and 2022.
The administration comes just two months after Fetch.ai secured $40 million in new funding. But Sheikh sought to paint a picture of business as usual. The CEO was keen to separate the operations of Fetch.ai UK with those of Fetch.ai Foundation, which is based in Dubai.
In a blog post, Sheikh said the Foundation, which operates the FET cryptocurrency tokens, is not affected by the UK administration. He said the UK business existed primarily to facilitate transactions for the Foundation as well as to hold its intellectual property.
“Fetch.ai reassures the community that business operations globally continue seamlessly, ensuring the distribution of tokens with no disruption to ongoing projects, token holders, or partners,” he said.
Sheikh added that the group is moving all its operations to Dubai because the UK regulatory environment “was still not clear and the banking system was hesitant around crypto.” He also revealed that Barclays Bank had closed down the company’s account.
“The AI uptake and the ability to commercialise AI is very acceptable in the Middle East at the moment, and they are offering us support,” he detailed.
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