A major shake-up for principal figures could be on the cards at Vesttoo, a spokesman has confirmed.

Vesttoo is an Israeli start-up insurtech which uses artificial intelligence technology to connect the insurance industry and capital markets. It has a Bermuda entity at the centre of its business model.

But a brewing scandal, which has brought an FBI investigation could lead to the ouster of the company’s co-founders.

The company said in a statement: “We can confirm that the board is considering the removal of Yaniv Bertele, chief executive officer and Alon Lifshitz, chief financial engineer, from their positions at the company.

“They will be on paid leave until a final decision is taken. We are exploring multiple options for interim replacements but no decision has been taken, as of yet.

“We want to emphasise that there are no plans to liquidate the company. Our aim is to help the company overcome this crisis, provide solutions to affected clients, and focus on our core services and value proposition in order to rebuild the company.

“The board has actively stepped in to assist in the company’s day-to-day operations for this purpose.”

The FBI Financial Crimes team is conducting an investigation into alleged fraudulent activity after claims of fake letters of credit – potentially to the tune of billions of dollars – provided by investors to insurers for reinsurance transactions involving Vesttoo.

Insurers felt compelled to outline their collateral position and their association with Vesttoo.

Meanwhile, the Bermuda office appeared to be in the midst of staffing changes as separately, Vesttoo, earlier in the week, said it was laying off around 150 employees or 75 per cent of the company’s workforce.

Three offices in Asia are set for closure but Bermuda is one of the offices being retained.

At the time, the company said it was conducting a rigorous internal and external analysis of the events leading up to the first report of a fraudulent LOC.

They said: “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.”

The company in an earlier statement suggested that, at the least, it seemed that Vesttoo’s procedures were circumvented.

The company, which uses artificial intelligence technology to connect the insurance industry and capital markets, last raised $80 million at a $1 billion value last October. At the time, it said it would use the funds to further expand its global presence.

Reuters reported that DBRS Morningstar global head of insurance Marcos Alvarez said in a recent note that the issue with letters of credit "could have ramifications for the broader insurance and reinsurance market".

The news agency said: ”Vesttoo's platform aimed to provide insurers with alternative forms of reinsurance. If insurers' reinsurance turns out not to be valid, they will need to find replacement cover, or pay any claims in full, industry sources say.

Insurance ratings agency AM Best said last week it was "monitoring the rapidly evolving situation" at Vesttoo and "reviewing … insurers that have material amounts of reinsurance counterparty credit risk and reliance on various forms of collateral".

Major insurance broker Aon said in a filing last week that some of its clients and counterparties had begun, or said they might begin, legal proceedings against Aon over the fraudulent letters of credit issue.

The Bermuda Monetary Authority was "aware of the recent developments surrounding Vesttoo", a spokesperson told Reuters by e-mail.

"Per the BMA’s remit, it is closely examining and, where needed, will act accordingly."