Fetch.ai (FET), one of the best performers in the crypto industry in 2023, seems to be in trouble after such an astounding performance. The firm behind the AI-based cryptocurrency has run into troubles in the United Kingdom after its UK entity was involved in a million-dollar lawsuit that saw it being put into administration.
Fetch.ai Runs Into Problems
According to reports from The Standard, Fetch.ai’s troubles started between 2021 and 2022, when the company took massive losses after the cryptocurrency industry saw prices plunge across the board. The company had reportedly lost 16.7 million pounds during this time and had to write down its assets by 231 million pounds.
Despite the price of FET recovering in 2023, the company continued to be plagued by problems and would eventually be sued by a former contractor. Eventually, Fetch.ai settled the claim by the contractor to pay around $1 million to the contractor, which included interest, as the contractor claimed they were owed $750,000 in unpaid FET tokens that were part of the deal.
The company was reportedly plagued with “financial difficulties,” and in an effort to save the business, the court ordered that the UK entity be put into administration. Now, a business being put into administration means that a third and unconnected party is given control of a company and, in the process, investigates the finances and then proposes a way forward. In the case of Fetch.ai, administrators from ReSolve were appointed to oversee this process after an official insolvency filing.
Token price shows strength above $0.55 | Source: FETUSD on Tradingview.com
Way Forward For The Company
In the wake of the company being put into administration, there have been some significant developments in connection to Fetch.ai. After ReSolve administrators were appointed to the case, the company was put up for sale and was eventually bought back by a consortium of Fetch.ai’s founders. According to ReSolve, the entity was sold back to the consortium owned by the founders because they had the best offer.
In an effort to placate investors who are worried about the future of the company, Humayun Sheikh, founder of Fetch.ai, explained that it is “business as usual” at the company. However, he explained that the company “was running on borrowed money,” which means it could not afford to pay the settlement order by the court.
Sheikh explained that the sale of the company to the consortium owned by the founders was only the “IP and the assets of the company” and that they were not trying to avoid complying with the court order. “It will be distributed to all the creditors and whatever the administrator decides, they will pay,” Sheikh said.
The founder also addressed the current landscape for crypto companies operating in the United Kingdom as not being conducive. He explained that crypto regulation was still a grey area in the country, making it hard to conduct business. “As much as the government is saying ‘come here and operate here’ the environment is not good,” Sheikh explained.
The company is reportedly in the process of moving its operation to the UAE, which has become a hotspot for crypto companies. FET token is still reeling from the impact, down 27% in the last month, according to data from CoinMarketCap.