SoftBank-Backed Fish Startup Allegedly Faked Most of Its Sales

In a shocking turn of events, eFishery, a once-thriving startup in the fisheries sector backed by prominent investors such as SoftBank, 42XFund, and Temasek, has found itself at the center of an alleged financial misconduct scandal. The company, which was the first startup in the global aquaculture industry to reach a valuation of over USD$1 billion, is now accused of fabricating most of its sales and inflating its revenue figures.

The allegations stem from a forensic audit conducted by a global firm hired to investigate eFishery's financial practices. According to Deal Street Asia, which obtained details from the audit, eFishery's co-founder and former CEO, Gibran Huzaifah, allegedly created and maintained two sets of accounting books from 2018 to meet the series A fundraising target. Huzaifah is said to have inflated the company's revenue by 20-25 percent to attract investors, presenting one set of books to external parties while keeping another for internal use.



The alleged scheme involved setting up five new companies in January 2022 to enable round-tripping, the transfer of funds from one party to another within the group of companies, to support the flow of money for fraudulent transactions. Huzaifah also allegedly overstated capital expenditure figures, which not only misled stakeholders about the company's financial health but also helped justify its declining cash position.

The company's institutional investors, including UAE's 42XFund, Switzerland's responsAbility, Singapore's Temasek, Japan's SoftBank, Malaysia's Kumpulan Wang Persaraan, Northstar Ventures, and 500 Global, have been informed of the investigation. eFishery swiftly appointed interim leaders to fill the vacant positions of CEO and CFO following the suspension of Gibran Huzaifah and Chrisna Aditya, the company's co-founder and CPO.

The allegations have raised serious concerns about the company's corporate governance and ethical business practices. Investors, shareholders, and the public are now questioning the accuracy of eFishery's financial reports and the true value of the company. The ongoing investigation may attract further regulatory scrutiny, potentially leading to fines, penalties, or even legal action against the company and its executives.

In response to these allegations, prominent investors such as SoftBank, 42XFund, and Temasek should take several steps to mitigate risks and protect their investments. These include conducting thorough due diligence, strengthening corporate governance, monitoring the investigation, engaging with other shareholders, and reviewing and updating investment strategies.

The alleged actions of Gibran Huzaifah and Chrisna Aditya have significantly impacted eFishery's trust and reputation, with potential long-term consequences for the company and its investors. The company must address these issues promptly and transparently to mitigate the damage and restore confidence in its business practices. As the investigation unfolds, the industry and investors will be watching closely to see how eFishery and its investors respond to these serious allegations.