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CaaStle, the embattled fashion startup whose board of directors accused its founder, Christine Hunsicke, of financial misconduct, is starting to face lawsuits from a partner and a supplier over missed payments and more allegations of fraud.<\/p>\n
As first reported by Axios<\/a> and by suits seen by TechCrunch, CaaStle is being sued by P180, a vehicle it launched to invest in companies that used CaaStle technology, and by EXP Topco, an apparel company that says the company never paid it after reaching a settlement for copyright infringement.\u00a0<\/p>\n A representative CaaStle did not immediately respond to TechCrunch\u2019s request for comment.\u00a0<\/p>\n The P180 suit<\/a> alleges, \u201cNothing about CaaStle was true.\u201d The lawsuit claims that CaaStle tried to hide details of its income and financial stability from P180. \u201cIt then fraudulently induced P180, among other things, to raise capital and take out multiple loans in the expectation that P180 would acquire viable assets, which P180 ultimately did,\u201d the suit alleges, adding that CaaStle also tried to force the two to merge.\u00a0<\/p>\n The suit goes on to say that because P180 believed it was misled, its \u201cinvestors took full control of the board,\u201d the suit continues. \u201cP180 has been harmed in excess of $58 million and seeks recovery of those proceeds, rescission of contract, and unwinding of corporate ties between itself and CaaStle.\u201d\u00a0<\/p>\n Meanwhile, EXP Topco is also suing. It alleges that Caastle breached<\/a> a settlement agreement by not paying fines after reaching the settlement over alleged copyright infringement.\u00a0<\/p>\n And Axios is also reporting on rumors of a possible class-action lawsuit<\/a> against an investment firm that brought CaaStle retail investors, although it didn\u2019t report the name of the investor. Axios first reported the news of CaaStle\u2019s financial troubles a month ago. Hunsicke, the company\u2019s founder, resigned from the board and stepped down from her role as CEO when the company said it was investigating allegations of financial misconduct.\u00a0<\/p>\n The company is exploring bankruptcy and secured $2.7 million in financing to help that process, Axios further reported. CaaStle raised over $530 million total, with its last round raised in 2019 at $43 million, PitchBook estimates.<\/p>\n In April, the board confirmed to TechCrunch that its financial circumstances were so dire at that time that it had to furlough employees. Should that whole $530 million be gone, this would be one of the largest startup fraud cases in recent history. In comparison, Frank, the student loan application startup, was purchased by JPMorgan for $175 million. Frank\u2019s founder, Charlie Javice, was found guilty last month<\/a>.<\/p>\n TechCrunch spoke to two former employees who said they were not surprised to hear that the company had financial troubles, though they didn\u2019t witness any of the alleged fraud.<\/p>\n One former employee, who asked to remain anonymous, doesn\u2019t recall the company holding updates about its financial health or how well it was doing. \u201cI think everyone laughed it off and was like, \u2018Oh, we probably don\u2019t make any money,\u201d the employee told TechCrunch.<\/p>\n When asked for a reaction to the fraud allegations, this person said, \u201cI don\u2019t think anyone expected it.\u201d\u00a0<\/p>\n<\/div>\n