Fintech unicorn Vesttoo faces alleged billion-dollar fraud scandal
Following an initial inspection conducted over the weekend, it was discovered that the billions of dollars in collateral presented by the company were fraudulent
UPDATE: Vesttoo investigation reveals $4 billion fraud involving fake letters of credit
Fraud amounting to billions of dollars has allegedly been uncovered at Israeli unicorn Vesttoo over the past week.
Vesttoo has developed a digital platform for assessing risk in insurance investments, which allows insurance companies to obtain reinsurance coverage through the capital market. However, following an initial inspection conducted over the weekend, it was allegedly revealed that the collateral presented by investors to the insured in transactions involving the company were fake. In other words, according to estimates, essentially all the collateral presented by the company did not exist.
The company told Calcalist in response: "The Vesttoo team discovered inconsistencies between an investor and a cedent in transactions that Vesttoo modeled the risk for. We take the integrity of our business very seriously and are conducting a comprehensive third party audit to ensure our due diligence processes continue to be robust."
In its most recent funding round in October 2022, Vesttoo raised $80 million at a $1 billion valuation. The Series C financing round was co-led by Mouro Capital and a private equity fund. A U.S.-based bulge-bracket investment bank, Gramercy Ventures, Black River Ventures, and Hanaco Ventures also participated in the round.
The Series C came less than a year after Mouro Capital led Vesttoo’s Series B round with participation from MS&AD Holdings. Hanaco Ventures led the Series A round in August 2021.
The company was established in 2018 by Yaniv Bertele, Ben Zickel and Alon Lifshitz. Vesttoo's technology utilizes historical information from insurance companies to create probabilistic risk and loss models for each investment.
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Bertele had previously told Calcalist that Vesttoo was set to end 2023 with a profit after already doing so in 2022.
Additionally, it has been revealed that many executives at Vesttoo have recently retired from the company in the wake of the scandal. With offices in Tel Aviv, New York, London, Hong Kong, Seoul, Tokyo, and Dubai, Vesttoo employs hundreds of people, with a significant number of them based in Israel.
