CaaStle Faces Mounting Legal Troubles and Fraud Allegations
Fashion startup CaaStle is facing multiple lawsuits and escalating accusations of fraud. This follows previous allegations of financial misconduct against founder Christine Hunsicker.
P180, an investment vehicle launched to utilize CaaStle's technology, has filed a lawsuit alleging that CaaStle misrepresented its financial status. The suit claims CaaStle fraudulently induced P180 to raise capital and take out loans. P180 is seeking over $58 million in damages.
Separately, apparel company EXP Topco is suing CaaStle for breach of a settlement agreement related to copyright infringement. EXP Topco alleges CaaStle failed to make agreed-upon payments.
These lawsuits, initially reported by Axios and covered by TechCrunch, add to CaaStle's growing legal woes. Axios also reports rumors of a potential class-action lawsuit against an investment firm that brought in retail investors for CaaStle.
CaaStle's Financial Troubles Deepen
CaaStle's financial situation appears dire. The company is reportedly exploring bankruptcy and has secured $2.7 million in financing for the process. This follows a reported $530 million in total fundraising, with the last round in 2019 totaling $43 million, according to PitchBook estimates.
In April, CaaStle furloughed employees due to its precarious financial circumstances. If the full $530 million is indeed gone, this case could become one of the largest startup fraud cases in recent history.
Former CaaStle employees expressed little surprise at the company's financial troubles, though they did not personally witness any fraudulent activity.
"I think everyone laughed it off and was like, 'Oh, we probably don't make any money,'" one former employee told TechCrunch.
The same employee also stated they did not expect the fraud allegations.
