The Bermuda Monetary Authority is monitoring troubles at Vesttoo, an innovative insurance marketplace that is dealing with issues related to collateral that may have been forged.

“The Bermuda Monetary Authority is aware of the recent investigation and allegations surrounding Vesttoo. Per the BMA’s remit, it will continue to monitor and, where needed, act accordingly,” according to a statement from the BMA.

The statement comes as more of the insurer’s leadership resigns, the China angle deepens and questions are being raised as to whether this might be an FTX moment for insurtech.

Press reports from Israel this week suggested that Tel Aviv’s Vesttoo may be having issues with collateral used to back transactions. The story continued to snowball, with $4 billion of forged letters of credit subsequently being mentioned in some unconfirmed reports.

According to stories published in Israel, the allegedly dodgy collateral may have been in the form of forged letters of credit from Chinese banks. China Bank of Construction —the third-largest bank in China and the ninth-largest in the world by market capitalisation — has done business with Vesttoo, according to one report, although it may not have been the source of the collateral being investigated.

The latest twist is that Chaucer, a reinsurer, may have exposure as a cedant to the Vesttoo marketplace. The company was purchased by China Re, a Chinese state-owned reinsurer, in 2018.

Vesttoo itself has confirmed the possibility of “inconsistencies” related to collateral put up for certain transactions, and has said that it is investigating. It has not replied to e-mails seeking further clarification.

About half-a-dozen executives have run for the exits. The Insurer reports that the latest is Ryan Hope, director of business development, US insurance markets, at Vesttoo.

Founded in 2018 with a cryptocurrency pedigree, Vesttoo has raised $110 million from investors and at one point was valued above $1 billion. The company, with locations from New York to Hong Kong, operates as a marketplace for non-catastrophe insurance-based risk transfer and investments.

It was marketed as being at the cutting edge of insurtech.

Vesttoo Alpha P&C was registered with the BMA in Bermuda in 2022 as a collateralised insurer, a new class of licence introduced by the regulator in 2019. The entity has been identified by company executives in interviews as the key to the innovative platform.

Its registered address in Bermuda is 45 Reid Street, the location of Wessex House. The company did not seem to be actively operating there this week.

Trade publications were writing on Thursday morning that the turmoil at Vesttoo may cause a “crisis of confidence” in the business, especially as most parties related to the insurtech have gone silent. Companies with exposure to Vesttoo are scrambling to assess their options, raising the possibility of knock-on effects.