JSE-listed Nutritional Holdings has distanced itself from the cryptocurrency CannaCrypt after weeks of boardroom turmoil. The JSE has launched an investigation after a March 2021 Nutrihold statement in which it said it would issue a cryptocurrency to raise money to expand its new business Ukusekela — a cannabis grower in Lesotho.
The JSE is investigation led to the sudden resignation of Nutrihold’s founding director Nikhyle Dasarath, which the company announced on 19 May 2021.
Business Day reported on 20 May 2021 that:
“The company raised eyebrows after it sent Nutritional Holdings shareholders an error-filled letter offering huge returns for investing in what it called the world’s first cannabis currency, cannacrypt. The letter promised that a R20,000 investment would turn into R2.4m within a decade.
Five days after the letter was sent to shareholders, Nutritional Holdings’ founder and director Nikhyle Dasarath set up a company called CannaCrypt.
The money raised was shifted into the private holding company CannaCrypt under Dasarath’s control.
The Financial Sector Conduct Authority (FSCA) recently said, while cryptocurrencies are not illegal, it is investigating the company.
Director of JSE regulation Andre Visser told Business Day last week that the exchange is investigating whether the company breached listing requirements. He said the JSE is “treating the matter with the necessary urgency”.
Visser said the JSE has instructed the company to issue further announcements, adding, “The JSE has also engaged with the FSCA and the Companies and Intellectual Property Commission (CIPC) on the matter as there may be areas that fall within their jurisdiction.”
On Tuesday (19 May 2021), Nutritional Holdings said in a statement that Dasarath no longer runs CannaCrypt.
Dasarath told Business Day it is a conflict of interest for him to be a director of the listed Nutritional Holdings and its fundraising cryptocurrency arm. The statement said: “The relationship to CannaCrypt will be that of a funder.”
“Dasarath, founder of CannaCrypt and a director of Nutritional Holdings, has divested all his interest in CannaCrypt and has resigned as a director of CannaCrypt with the sole objective of removing any potential conflict of interest or related-party concerns.”
However, a search on the CIPC website shows Dasarath is still the director of the cryptocurrency firm. He told Business Day that it would take a few days before the CIPC reflects the new director of CannaCrypt.
A day after the company sent the unconventional fundraising letter, the company’s designated adviser, Exchange Sponsors, reported them to the JSE and quit.
Exchange Sponsors would not disclose to Business Day why it had quit, but the JSE said it was aware of the reasons.
Nutritional Holdings, which is worth 1c on the JSE, sells maize-based food to schools and prisons.