Israeli FinTech Vesttoo has filed for Chapter 11 bankruptcy protection amidst the company’s ongoing fraud scandal.
The crisis-hit firm has seen the domino-effect over the alleged use of a fraudulent letter of credit in a multi-billion-dollar insurance transaction wreak havoc, leading to the lay-off of 75% of its staff, and the appointment of new Interim CEO, Ami Barlev.
The organisation is also under fire due to a New York court appearance in relation to a lawsuit and temporary restraining order on its assets filed by Aon.
The broker is aiming to recover almost $137 million of funds that got swapped out of a White Rock cell and replaced with letters of credit that a bank said were invalid.
The application for Chapter 11 bankruptcy protection is set to offer the company – which uses artificial intelligence technology to connect the insurance industry and capital markets – more breathing room in its battle against the lawsuit and root out those responsible for the LoC fraud.
Vesttoo blames the fraud charges principally on principally on “external factors” including foreign banks and financial institutions.
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