The Bermuda platform of a financial services company may have been spared as the hammer fell on offices in three Asian cities for the fintech company Vestoo.

The company said Tuesday that it was laying off about 75 per cent of its staff and closing some offices in Asia as it tries to recover from a scandal over an alleged fraudulent letter of credit used as collateral in a transaction with an insurer.

The evolving scandal has been monitored by the Bermuda Monetary Authority for weeks.

The Israel-based company, which uses artificial intelligence technology to connect the insurance industry and capital markets, said it would close its Tokyo, Hong Kong and Seoul offices, but would maintain staff in Tel Aviv, New York, London, Dubai and Bermuda. It said it had around 200 employees.

In Bermuda, however, there already is limited or no staff, at present.

Trouble began when it was discovered that there was some discrepancy with the collateral used to back transactions on its platform, including a letter of credit.

In a statement sent to The Royal Gazette and other media, a spokesman said Tuesday: “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.

“These are painful, but important decisions that we must make, at this time. Our focus remains on regaining our footing and emerging from this challenge stronger than before.

“We thank those who are leaving us for their contributions and will be working to support them through this transition.”

The unusual events led to swift action by rating agents. AM Best said it was taking a close look at the collateral of some rated insurers after the first reports of trouble at Vesttoo.

“Rating actions will be taken as warranted,” the New Jersey-based ratings agency said.

It noted that the vast majority of US fronting carriers it recently examined remain highly exposed to the reinsurance market.

News agency Reuters reported that Vesttoo – partly backed by Banco Santander's fintech venture capital arm Mouro Capital – was in the process of raising around $200 million in a late stage funding round that would value the firm at nearly $2 billion, but the company said it was not moving ahead with the fundraising.

The insurtech start-up aimed to be the eBay of reinsurance and included the Bermuda entity at the centre of its business model.

Led by Mouro, Vesttoo 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.