NS8, A Fraud Prevention Startup Lays Off 100+ Employees Amid SEC Fraud Investigation
In a dramatic turn of events, NS8, a fraud prevention startup is undergoing fraud investigation from the Securities and Exchange Commission (SEC). It will also sack hundreds of employees in a bid to downsize.
Forbes reports that the company sent out a letter on 10th September 2020 to employees informing them of the development. It said that the downsizing decision was a result of ‘sudden and unforeseen circumstances’.
The report quotes a staff of NS8 who said that the company had held a Zoom meeting to inform them ahead of the changes. “We got on and were told that our finances were not what we thought they were, and there would be layoffs,” the software engineer said.
NS8 had just announced acquiring a $123 million Series A funding led by Lightspeed Partners. This funding had boosted the company’s value to about $400 million. But, with the reports that are going around, the company may be heading for a crash.
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Its CEO, Adam Rogas had stepped down from his position and left the company as the situation got out of hand. But Rogas says that he had not left with any of NS8’s money. Instead, in a LinkedIn post, he says that he left NS8 because of family and personal reasons.
According to Adam Rogas, the SEC fraud investigation on NS8 had begun in November 2019. He further revealed that the company’s board had used the investigation as an excuse to insinuate things about him.
Before the massive layoffs that it announced, NS8 had 225 employees or thereabout. Rogas said that it was spending nearly $6 million every month and was nearly out of cash before raising an initial $50 million in funding in 2019.
Meanwhile, the SEC has not made an official statement on the fraud investigation it is carrying out at NS8. NS8 itself had started in 2016 and was focused on detecting fraud online and also providing software for small businesses to counter this plague.
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