## CaaStle’s Collapse Deepens: Fashion Startup Hit with New Lawsuits and Fraud Allegations
CaaStle, the once-promising fashion rental startup already reeling from allegations of financial misconduct against its founder, Christine Hunsicke, is now facing a wave of lawsuits and escalating accusations of fraud. The company, which raised over $530 million, appears to be on the brink of collapse, potentially marking one of the largest startup fraud cases in recent history.
According to reporting by Axios and court documents reviewed by TechCrunch, CaaStle is currently embroiled in legal battles with P180, an investment vehicle it launched to support companies using its technology, and EXP Topco, an apparel company claiming unpaid dues following a copyright infringement settlement.
P180’s lawsuit paints a grim picture, alleging that “Nothing about CaaStle was true.” The suit claims CaaStle concealed critical financial information, fraudulently inducing P180 to raise capital and secure loans under the false pretense of acquiring viable assets. Furthermore, the lawsuit alleges CaaStle attempted to force a merger between the two entities. P180, now under investor control due to the alleged deception, seeks over $58 million in damages, rescission of the contract, and the severing of corporate ties.
EXP Topco’s lawsuit centers on a breach of a settlement agreement. The apparel company claims CaaStle failed to pay agreed-upon fines following a settlement related to copyright infringement.
Adding fuel to the fire, Axios is also reporting on rumors of a potential class-action lawsuit targeting an investment firm that brought retail investors to CaaStle. This follows their initial report a month prior detailing CaaStle’s mounting financial woes, which ultimately led to Hunsicke’s resignation as CEO and board member amid internal investigations.
While exploring potential bankruptcy options, CaaStle secured $2.7 million in financing to navigate the process. The sheer scale of potential losses – the company raised over half a billion dollars – dwarfs other recent startup fraud cases. As a stark comparison, the case of Frank, the student loan application startup acquired by JPMorgan for $175 million, saw its founder convicted of fraud just last month.
TechCrunch spoke with two former CaaStle employees, who, while unaware of any explicit fraudulent activities, expressed little surprise at the company’s financial struggles. One anonymous employee noted the lack of transparency regarding the company’s financial health, stating, “I think everyone laughed it off and was like, ‘Oh, we probably don’t make any money.’” When asked about the fraud allegations, the employee added, “I don’t think anyone expected it.”
The unfolding situation at CaaStle serves as a cautionary tale for investors and underscores the importance of due diligence and transparency in the startup world. The future of CaaStle hangs in the balance, with bankruptcy and potential further legal challenges looming large.