Israel-based fintech firm Vesttoo, known for using artificial intelligence to bridge the insurance industry and capital markets, is laying off 75% of its workforce amid a growing scandal involving the alleged use of a fraudulent letter of credit in a multi-billion dollar insurance transaction.
With 200 employees, the company is shutting down offices in Tokyo, Hong Kong, and Seoul, while maintaining operations in Tel Aviv, New York, London, Dubai, and Bermuda.
Vesttoo’s challenges arose when discrepancies were found related to the collateral backing transactions on its platform, which facilitates reinsurance coverage for insurance companies through capital markets.
In a statement, Vesttoo stated: “The company is conducting a rigorous internal and external analysis of the events leading up to the first report of a fraudulent LOC. We have engaged an experienced global risk, audit, and compliance expert and external attorneys to advise us throughout this process. In order to solidify the foundation of the company and reassure the industry, leadership must return its focus to core services while reducing overall costs, including parting ways with some of our employees.”
In October, Banco Santander’s venture arm Mouro Capital led an $80 million equity raise for Vesttoo, achieving a valuation of $1 billion. However, a planned $200 million funding round at double that valuation has been called off due to ongoing investigations.