As the saga involving insurtech Vesttoo continues to develop, it’s now been reported that the CEO and Chief Financial Officer, two of the co-founders of the company, have been removed at the Board’s request, as internal disagreements over how to handle the fall-out of the collateral fraud issues rose to the fore.It’s been clear since the beginning of this saga that a senior, likely Board level, person at Vesttoo has been responsible for leaking information to the media in Israel and there has likely been a lack of alignment within the company.That appears to be continuing, as last night tech publisher Calcalist was the first to report that CEO Yaniv Bertele and Chief Financial Officer Alon Lifshitz have been removed from their positions by the Board.The story is that the Board now plan to dismantle the company to retrieve whatever money is still available within it, said to be tens of millions of dollars.

But, the company has told us this morning in a statement that no such decision has been made at this time.We are also told CTO Ben Zickel remains in his position and the Board is taking control, with an interim CEO perhaps the next step.At this stage, with everything that has been going at Vesttoo, it remains challenging to understand the motivations, as information for a reason to have removed Bertele and Lifshitz is lacking and no Board statement has been made at this time.

What’s clear though, is that the situation continues to develop and more information is emerging, including that there are now multiple banks that are said to have been named on fraudulent or forged letters of credit (LOCs)..Calcalist reports that Vesttoo CEO Yaniv Bertele has been placed on forced leave, which the publisher construes as meaning a lay-off.

It’s said the Board had informed Bertele that neither he nor Alon Lifshitz would be able to return to the company until further notice, with their connection to the company’s IT systems cut.Calcalist stated that a conclusion of the committee that examined the alleged fraud was that the current management had not been reporting regularly enough to the directors.Calcalist received a statement from Bertele, that reads, “Unfortunately, parties with their own interests have chosen to take advantage of the temporary crisis that the company has fallen into in order to promote an improper takeover, even at the cost of causing fatal damage to the company and prioritizing their personal interests over the interests of the company and its investors.

“This move was accompanied by false and consistent leaks in the media that caused the company heavy and real damage.This is particularly true when considering that an external investigation did not establish any suspicion against any of the members of the company’s management, and for good reason.” Bertele’s statement said he will consider his next steps in view of the latest developments and “will not hesitate to take legal proceedings while keeping the good of the company in mind.” Yesterday, the Insurance Insider team were first to report that a second bank was connected to fraudulent letters of credit (LOCs) issued for Vesttoo collateralized reinsurance deals, Standard Chartered.Sources have told us that they believe they understand there will ultimately be a third bank involved as well, as there has been found to be another at this stage unknown bank name on some of the implicated LOCs.

We’re told it still appears that the LOCs came from within the banks in question, which supports that this is very sophisticated and goes some way to explaining why the fraud issues hadn’t been spotted by market participants in the chain of risk transfer related to the reinsurance deals in question.It’s not possible to completely verify this new information, but it further underscores that the fraud that has taken place looks to be very sophisticated, although the actual motives for undertaking it (of which there are many possibilities) and who was ultimately behind it remains unclear at this stage.The departure of the CEO and a co-founder suggests Vesttoo, as a company, may now be unlikely to make it through this crisis, if there is no directional change from now.

While that may have been inevitable, given the developments of the last fortnight or so, at this stage there still has not been any evidence presented to suggest that the senior team at Vesttoo was implicated in the fraud that has taken place.In fact, evidence remains the one thing missing from this entire saga.Despite a third-party audit and investigation that Kroll has undertaken, the Board of Vesttoo has not released any information as to how any fraud actually occurred and we continue to hear that this is because they have struggled to identify where the source of the fraud lies, whether internal or external to Vesttoo, or a combination of the two.

So, we still don’t actually know if Vesttoo staff perpetrated the fraud, were a party to it, or whether they were subject to it and perhaps could be thought of as a victim whose controls failed them.We still lack the evidence necessary to make any conclusions on this at this time.The more sophisticated this fraud appears to be, the more it seems like a possibility that Vesttoo is caught up, or involved in, something much bigger than it, with the ultimate source of the fraud coming from outside.

One thing is certain, there needs to be a push for evidence to be presented and the findings of the Vesttoo audit to be made available to the relevant authorities to help in the .Should the ultimate source of the fraud appear to be coming from outside the company, there is the chance this is a much bigger story than one just involving a single insurtech, with potential implications for other users of LOCs, within insurance and reinsurance, or even outside of this industry.August 2nd – .

August 1st – .August 1st – .August 1st – .

July 31st – .July 28th – .July 28th – .

July 28th – .July 27th – .July 27th – .

July 27th – .July 26th – .July 25th – .

July 25th – .July 25th – .July 24th – .

July 21st – July 20th – .July 20th – .July 19th – July 18th – .

Space is limited.Get a ticket to ensure you can attend.