'You Can't Make This Up,' Chamath Palihapitiya Says
As $20 Billion Edtech Startup Byju's Sued For Hiding $533 Million in Florida IHOP-Based Hedgefund
Caleb Naysmith
Mon, September 18, 2023
In a shocking revelation, Indian edtech giant Byju's is accused of stashing $533 million in Camshaft Capital Fund, a relatively obscure hedge fund that once listed its primary business address at an IHOP in Miami. Putting the money at IHOP was brought to light by lenders attempting to recover the money.
According to the lenders' lawsuit, Byju's reportedly transferred over $500 million last year to Camshaft Capital Fund, an investment entity set up by William C. Morton at age 23. Morton's fund received the money even though he allegedly lacked formal investment training. After the transfer, Morton reportedly added several luxury cars to his portfolio, including a 2023 Ferrari Roma, a 2020 Lamborghini Huracán EVO and a 2014 Rolls-Royce Wraith, according to court documents.
This startling development adds to the already tumultuous saga between Byju's and its lenders. The bone of contention is the $533 million, which the lenders assert is collateral for a $1.2 billion loan. With lenders labeling the loan in default, Byju's has fired back, accusing them of employing predatory lending practices.
In recent court filings in Miami-Dade County, the lenders argued that Byju's has taken considerable measures to hide the whereabouts of the $533 million, primarily to hinder and delay the recovery process by the creditors. Amid these allegations, Byju's has made an unexpected proposal to repurchase the loan within a six-month window, possibly by liquidating some of its international assets to potential private equity and strategic buyers. However, Byju's said it hasn’t been officially notified about the Florida court proceedings.
Despite being a hedge fund, Camshaft seems to cater to smaller investors, further deepening the intrigue. A 2020 Securities and Exchange Commission (SEC) filing disclosed Camshaft's principal business location as an IHOP address at 285 NW 42nd Ave. in Miami. The current occupant at the address, a bustling IHOP, seemed oblivious to any hedge fund connections.
While the server at the IHOP expressed disbelief about its purported ties to a hedge fund, another entity associated with Camshaft had its business address at the upscale Porsche Design Tower in Sunny Isles Beach, Florida — the condo building where global soccer sensation Lionel Messi resides. In a separate lawsuit, Camshaft claimed its principal business location as the Virgin Islands.
This ongoing monetary tussle, termed the Cash Fight, is now center stage, with lenders aggressively pursuing the alleged hidden cash. Byju's has defended its stance, stating that the money transfer was permissible under the loan agreement's terms.
The recent lawsuit aims to track the money and recover any superfluous management fees paid to Camshaft, which had yet to respond to these claims.
Byju's, which has been on the radar of industry heavyweights such as the Chan Zuckerberg Initiative, Silver Lake Management and Naspers Ltd., was valued at $20 billion last year. The valuation came under the spotlight when merger discussions with a special-purpose acquisition company were underway.
Prominent investor Chamath Palihapitiya weighed in on the unfolding drama, highlighting Byju's journey from securing billion-dollar investments and going global to facing resignations and now the financial allegations.
Caleb Naysmith
Mon, September 18, 2023
In a shocking revelation, Indian edtech giant Byju's is accused of stashing $533 million in Camshaft Capital Fund, a relatively obscure hedge fund that once listed its primary business address at an IHOP in Miami. Putting the money at IHOP was brought to light by lenders attempting to recover the money.
According to the lenders' lawsuit, Byju's reportedly transferred over $500 million last year to Camshaft Capital Fund, an investment entity set up by William C. Morton at age 23. Morton's fund received the money even though he allegedly lacked formal investment training. After the transfer, Morton reportedly added several luxury cars to his portfolio, including a 2023 Ferrari Roma, a 2020 Lamborghini Huracán EVO and a 2014 Rolls-Royce Wraith, according to court documents.
This startling development adds to the already tumultuous saga between Byju's and its lenders. The bone of contention is the $533 million, which the lenders assert is collateral for a $1.2 billion loan. With lenders labeling the loan in default, Byju's has fired back, accusing them of employing predatory lending practices.
In recent court filings in Miami-Dade County, the lenders argued that Byju's has taken considerable measures to hide the whereabouts of the $533 million, primarily to hinder and delay the recovery process by the creditors. Amid these allegations, Byju's has made an unexpected proposal to repurchase the loan within a six-month window, possibly by liquidating some of its international assets to potential private equity and strategic buyers. However, Byju's said it hasn’t been officially notified about the Florida court proceedings.
Despite being a hedge fund, Camshaft seems to cater to smaller investors, further deepening the intrigue. A 2020 Securities and Exchange Commission (SEC) filing disclosed Camshaft's principal business location as an IHOP address at 285 NW 42nd Ave. in Miami. The current occupant at the address, a bustling IHOP, seemed oblivious to any hedge fund connections.
While the server at the IHOP expressed disbelief about its purported ties to a hedge fund, another entity associated with Camshaft had its business address at the upscale Porsche Design Tower in Sunny Isles Beach, Florida — the condo building where global soccer sensation Lionel Messi resides. In a separate lawsuit, Camshaft claimed its principal business location as the Virgin Islands.
This ongoing monetary tussle, termed the Cash Fight, is now center stage, with lenders aggressively pursuing the alleged hidden cash. Byju's has defended its stance, stating that the money transfer was permissible under the loan agreement's terms.
The recent lawsuit aims to track the money and recover any superfluous management fees paid to Camshaft, which had yet to respond to these claims.
Byju's, which has been on the radar of industry heavyweights such as the Chan Zuckerberg Initiative, Silver Lake Management and Naspers Ltd., was valued at $20 billion last year. The valuation came under the spotlight when merger discussions with a special-purpose acquisition company were underway.
Prominent investor Chamath Palihapitiya weighed in on the unfolding drama, highlighting Byju's journey from securing billion-dollar investments and going global to facing resignations and now the financial allegations.
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