Byju’s $533 Million Fraud Exposed: U.S. Bankruptcy Court Delivers Landmark Verdict

The Delaware Court’s ruling is a stark warning to Indian startups pursuing global expansion through debt—without strong governance and financial transparency, even the biggest names can collapse.

Feb 28, 2025

Byju’s $533 Million Fraud Established by U.S. Bankruptcy Court

In a dramatic turn of events, the U.S. Bankruptcy Court for the District of Delaware today established a $533 million financial scandal involving Byju’s, once hailed as India’s most successful edtech startup. In a landmark ruling delivered on February 28, 2025, Judge John T. Dorsey found Byju’s Alpha Inc., its director Riju Ravindran (brother of founder Byju Raveendran), Think & Learn Pvt Ltd, and Camshaft Capital Fund guilty of fraudulent transfers and financial misconduct.

The court’s judgment paints a damning picture of how Byju’s siphoned half a billion dollars from its U.S. subsidiary to a shadowy hedge fund, Camshaft Capital, which operated out of an IHOP restaurant in Miami. The ruling underscores deliberate financial fraud, corporate governance failures, and a blatant breach of fiduciary duties, raising serious questions about the operations of India’s most high-profile startup.

The Shocking Details of the Court Verdict

The ruling exposes a well-orchestrated scheme to siphon $533 million from Byju’s Alpha, a U.S.-based financing entity, to an unregulated hedge fund created by 24-year-old William Morton. The court found that:

Fraudulent Transfers: Byju’s Alpha defaulted on its loan covenants in March 2022, and shortly afterward, $533 million mysteriously vanished into Camshaft Capital Fund. The court confirmed these transactions were outright fraud and conversion (theft).
Breach of Fiduciary Duty: Riju Ravindran, acting as a director of Byju’s Alpha, was found guilty of authorizing these transactions recklessly, failing to protect the company's financial integrity.
Role of Camshaft Capital: The so-called hedge fund was exposed as a sham with no legitimate operations, existing solely as a vehicle to launder the misappropriated funds.
Byju’s Parent Company Involvement: Think & Learn Pvt Ltd, the Indian parent company, was directly implicated in misusing its U.S. subsidiary to orchestrate financial fraud.

The judgment followed a lawsuit filed in February 2024 by Byju’s creditors, led by Glas Trust LLC, seeking to recover the stolen funds. While damages will be determined later, this ruling cements Byju’s as the perpetrator of one of the biggest financial fraud cases linked to an Indian startup.

Timeline: How the Byju’s Scandal Unfolded

November 2021 – Byju’s Alpha secures a $1.2 billion loan from Glas Trust LLC.
March 2022 – Byju’s defaults on loan covenants.
March–April 2022 – $533 million disappears through four unauthorized transfers to Camshaft Capital Fund.
March 2023 – Lenders remove Riju Ravindran from Byju’s Alpha board.
February 2024 – Bankruptcy proceedings begin in Delaware.
February 28, 2025 – Judge Dorsey delivers the damning verdict.

Statements from the Court and Stakeholders

The lenders, who have been fighting for over a year to recover their money, hailed the verdict as a crucial step toward justice. In an official statement, they said:

“We are gratified that the court unequivocally recognized that Riju Ravindran, Camshaft, and Byju’s orchestrated a deliberate fraud on a global scale arising from the theft of $533 million.”

Judge Dorsey’s ruling was particularly scathing, highlighting the defendants’ repeated attempts to hide the stolen money, violations of court orders, and refusal to produce financial records. The judge’s findings leave little doubt about Byju’s intent to deceive creditors and regulators alike.

How Byju’s Engineered a Financial Black Hole

Byju’s Alpha was supposed to function as a special purpose vehicle (SPV) to manage the $1.2 billion loan it secured in 2021. But in less than six months, over 40% of that money had disappeared into a shadowy network of transactions.

Investigators found that:

The $533 million was funneled through Camshaft Capital Fund, an entity registered under William Morton, a young and unknown financier with no track record.
The fund operated from an IHOP restaurant in Miami, raising serious doubts about its legitimacy.
Multiple transactions between Camshaft, Inspilearn LLC, and offshore trusts helped the money vanish.
Byju’s parent company, Think & Learn Pvt Ltd, was complicit in using its U.S. arm as a front for financial misconduct.

This elaborate web of transactions was designed to keep the money out of creditors’ reach, a scheme that backfired spectacularly in court.

Indian Authorities' Response: A Stark Contrast

While U.S. courts have ruled decisively against Byju’s, Indian regulators have taken a more lenient view. Investigations by India’s Ministry of Corporate Affairs (MCA) found no direct financial fraud but flagged serious corporate governance lapses, including:

Opaque acquisitions where Byju’s made billion-dollar purchases without transparency.
Failure to disclose financial dealings to investors and board members.
Weak internal compliance and audit mechanisms, allowing financial mismanagement to thrive.

Despite this, Indian regulators have not formally charged Byju Raveendran, though investors like Prosus Ventures and Peak XV Partners resigned from Byju’s board in 2023, citing a lack of transparency. Their troubles in India appeared to ease after settling the ₹158.90 crore claim of the Board of Control for Cricket in India (BCCI) in the National Company Law Appellate Tribunal (NCLAT) on August 1, 2024, as the amount payable for their sponsorship of the Indian cricket team.

However, lawsuits in India continue:

National Company Law Tribunal (NCLT) cases from creditors, including McGraw Hill and Cogent E-services.
Investor lawsuits alleging oppression and mismanagement against Byju’s leadership.

The contrast is striking—while U.S. courts have identified outright fraud, Indian regulators have merely flagged governance lapses without taking action against Byju’s leadership.

What This Means for Indian Startups

The Delaware Court’s ruling sends a chilling message to Indian startups aggressively seeking global expansion through foreign loans. Without strong governance and financial transparency, even the biggest names can fall.

For Byju’s, this ruling represents a catastrophic loss of credibility. Once valued at $22 billion, the edtech giant now faces:

Mounting lawsuits in the U.S. and India
Severe reputational damage among global investors
A potential collapse of its restructuring plans

Where is the ‘Dynamic’ Duo? Do they face Jail Time in USA?

As the lawsuit moves into the damages phase, the financial fallout for Byju’s could be devastating, imparting it the reputation of one of the most brazen corporate frauds in Indian startup history. As of February 28, 2025, Byju Raveendran and Riju Ravindran are believed to be operating discreetly from Bengaluru, trying to negotiate settlements with lenders, including State Bank of India (SBI). However, it is widely speculated that these negotiations are happening virtually, as no one has confirmed meeting them in person in recent weeks. Their prolonged absence from public view, along with the lack of recent photographs or video footage, has intensified speculation about their whereabouts. While they do not currently face jail time in the U.S., their ability to pay the damages determined by the US Court will be crucial in avoiding further legal troubles.

Looking Forward— Test for the Indian Legal System

The coming months will decide whether Byju’s can weather this scandal or if this marks the beginning of the end for the company that once symbolized India’s edtech revolution, with Byju Ravindran being the poster boy. It will also serve as a litmus test for the Indian legal system, where creditors—except for the politically connected and powerful BCCI, which successfully reclaimed its dues—are left scrambling from pillar to post to recover the funds they loaned to Byju’s parent company. The outcome will reveal whether India’s corporate accountability measures can stand up to a case of this magnitude or if financial mismanagement at this scale can escape meaningful repercussions.

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