Struggling startup CaaStle hit with two new lawsuits and additional allegations

Troubled startup CaaStle is currently in hot water, facing two new lawsuits and more allegations. The fashion startup, embroiled in controversy after its founder Christine Hunsicker was accused of financial misconduct by the board of directors, is now dealing with legal action from a partner and a supplier due to missed payments and claims of fraud.

P180, a vehicle launched by CaaStle to invest in companies utilizing its technology, is one of the entities suing the startup. The lawsuit alleges that CaaStle engaged in deceptive practices, withholding key financial information and misleading P180 into raising capital and taking out loans under false pretenses. Allegations also include an attempt to coerce a merger between the two companies. As a result of feeling misled, P180’s investors have taken control of the board, seeking to recover losses exceeding $58 million.

EXP Topco, an apparel company, is also taking legal action against CaaStle. The lawsuit claims that CaaStle violated a settlement agreement by failing to pay fines related to a copyright infringement settlement.

Rumors of a potential class-action lawsuit against an investment firm that facilitated CaaStle’s retail investor outreach have also surfaced. While the firm remains unnamed, Axios hinted at the possibility of such legal action looming. The initial reports of CaaStle’s financial troubles emerged a month ago when founder Christine Hunsicker stepped down as CEO and resigned from the board following the investigation into financial improprieties.

Facing potential bankruptcy, CaaStle has secured $2.7 million in financing to navigate the process. The startup had previously raised over $530 million, with its most recent funding round in 2019 totaling $43 million.

The ongoing legal battles and financial challenges underscore the tumultuous situation CaaStle finds itself in, as the fallout from the accusations against its founder continues to unfold. With lawsuits mounting and the cloud of bankruptcy looming, the future of the once-promising startup hangs in the balance.