LONDON (Reuters) – Israeli fintech company Vesttoo is in “active discussions” with potential investors to find alternative collateral for clients after discovering fake letters of credit had been used on its platform, a company spokesperson said on Monday.
Vesttoo, which uses artificial intelligence technology to connect the insurance industry and capital markets, is also in contact with regulatory bodies worldwide, the spokesperson said in an emailed statement.
Vesttoo provides insurers with access to so-called insurance-linked securities – an alternative form of reinsurance. These securities may be backed by collateral in the form of letters of credit.
If the securities turn out not to be valid, insurers will need to find replacement cover, or pay any insurance claims in full, industry sources say.
Vesttoo was working with the markets to find alternative collateral, it said in the statement.
Vesttoo – partly backed by Banco Santander’s fintech venture capital arm Mouro Capital – said last week it was laying off about 75% of its staff and considering removing chief executive Yaniv Bertele, following internal and external investigations into the events leading to the first report of a fraudulent letter of credit used in many transactions.
The external investigation is continuing, Vesttoo said on Monday, adding that “know your customer” procedures had been conducted on all the parties involved in the suspected fraud.
Vesttoo said a core team of more than 50 people was working to seek alternative collateral, and the company would meet all its commitments to suppliers and consultants.
(Reporting by Carolyn Cohn; Editing by David Goodman and Mark Potter)
