In a shocking revelation, Builder.ai, an AI startup once valued at $1.5 billion, and VerSe Innovation, the parent company of popular Indian news app Dailyhunt, have been accused of engaging in a $60 million round-tripping scandal. According to reports, the two companies allegedly exchanged invoices between 2021 and 2024 without providing genuine goods or services, solely to inflate revenue figures for investor appeal.
The practice of round-tripping involves transferring funds between entities to create the illusion of legitimate business transactions. Sources claim that Builder.ai and VerSe Innovation used this tactic to mislead investors by showcasing artificially boosted sales numbers, raising serious ethical and legal concerns in the startup ecosystem.
Builder.ai, which recently announced plans to file for bankruptcy, has been under scrutiny for its financial practices. Documents reviewed by Bloomberg and insider information suggest that the company fabricated business dealings with VerSe Innovation over several years, further damaging its credibility in the tech industry.
VerSe Innovation, known for its platforms like Dailyhunt and short-video app Josh, is also facing backlash for its alleged role in the scandal. The company, which recently laid off 350 employees in an AI-driven restructuring effort, now finds itself entangled in accusations that could impact its reputation and future funding prospects.
The $60M scandal has sparked debates about transparency and accountability in the startup world, with experts calling for stricter regulations to prevent such deceptive practices. Investors and stakeholders are now questioning the integrity of financial reporting in high-growth tech companies.
As investigations unfold, the fallout from this controversy could have far-reaching implications for both Builder.ai and VerSe Innovation. The incident serves as a cautionary tale for the industry, highlighting the importance of ethical business practices in maintaining trust and credibility.
Alfred Lee
