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Vesttoo to sack 75% of staff

Vesttoo to sack 75% of staff

Israel-based Vesttoo, which uses artificial intelligence technology to connect the insurance industry and capital markets, is laying off 75% of its staff amid a growing scandal over the alleged use of a fraudulent letter of credit in a multi-billion dollar insurance transaction.

The company, which employs 200 people, is closing its office in Tokyo, Hong Kong and Seoul but will remain open for business in Tel Aviv, New York, London, Dubai and Bermuda.

The fintech firm's struggles began when a discrepancy was discovered with the collateral used to back transactions on its platform, which allows insurance companies to obtain reinsurance coverage through the capital market.

In a statement, Vesttoo says: “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."

Banco Santander's venture arm Mouro Capital led an $80 million equity raise for Vestto at a $1 billion valuation in October. An imminent $200 million round at double the valuation has been abandoned in the wake of ongoing investigations.

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