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The fintech company faced massive fraud in the US and did not disclose the incident publicly.
Fintech startup Revolut lost about $ 20 million due to an error in its payment system in the United States. This is reported by the Financial Times, citing several sources.
According to the publication, the problem arose due to differences between European and American payment systems, which led to the fact that when certain transactions were rejected, Revolut mistakenly returned money, giving out its own funds.
The problem was first noticed at the end of 2021, but the attackers took advantage of it only in early 2022. They encouraged people to make expensive purchases, which were then rejected, and the money returned to the account was cashed out through ATMs.
Revolut did not notice a large-scale fraud, and the problem was identified by a partner bank in the United States, which informed fintech that it was storing less cash than expected. After that, the American division of Revolut requested several million dollars in cash from the parent company, and the startup itself fixed the problem by the spring of 2022, sources say FT.
According to them, Revolut managed to recover some of the stolen $23 million, but the company's losses from the incident, which it has not yet reported publicly, amounted to about $20 million, which is equivalent to almost two-thirds of the startup's profit for 2021. A representative of Revolut did not comment on this case.
Revolut also did not mention the theft in its report for 2021, which was the first profitable year for the company since it was founded. According to its belated financial statements, its annual profit was $31 million. However, audit firm BDO warned in its opinion on the report that earnings could be "materially misstated". The auditors noted that they did not receive sufficient evidence of the ”completeness and reliability" of revenues from Revolut's three business units totaling £477 million ($612 million), or 75% of the company's total revenue.
In response, Revolut issued a statement saying that the BDO auditors report “confirmed that the financial statements give a true and fair view” of the company's position. The startup also criticized the” incorrect coverage " of the audit report in the media, emphasizing that all £636 million of revenues were “independently verified” and “do not cause doubts”.
A theft incident can negatively affect the reputation and credibility of the company, which has already faced the departure of several top managers in recent months. Also, two investors, Molten Ventures and Schroders, lowered the valuation of their shares in Revolut by 40% and 46%, respectively.
Fintech startup Revolut lost about $ 20 million due to an error in its payment system in the United States. This is reported by the Financial Times, citing several sources.
According to the publication, the problem arose due to differences between European and American payment systems, which led to the fact that when certain transactions were rejected, Revolut mistakenly returned money, giving out its own funds.
The problem was first noticed at the end of 2021, but the attackers took advantage of it only in early 2022. They encouraged people to make expensive purchases, which were then rejected, and the money returned to the account was cashed out through ATMs.
Revolut did not notice a large-scale fraud, and the problem was identified by a partner bank in the United States, which informed fintech that it was storing less cash than expected. After that, the American division of Revolut requested several million dollars in cash from the parent company, and the startup itself fixed the problem by the spring of 2022, sources say FT.
According to them, Revolut managed to recover some of the stolen $23 million, but the company's losses from the incident, which it has not yet reported publicly, amounted to about $20 million, which is equivalent to almost two-thirds of the startup's profit for 2021. A representative of Revolut did not comment on this case.
Revolut also did not mention the theft in its report for 2021, which was the first profitable year for the company since it was founded. According to its belated financial statements, its annual profit was $31 million. However, audit firm BDO warned in its opinion on the report that earnings could be "materially misstated". The auditors noted that they did not receive sufficient evidence of the ”completeness and reliability" of revenues from Revolut's three business units totaling £477 million ($612 million), or 75% of the company's total revenue.
In response, Revolut issued a statement saying that the BDO auditors report “confirmed that the financial statements give a true and fair view” of the company's position. The startup also criticized the” incorrect coverage " of the audit report in the media, emphasizing that all £636 million of revenues were “independently verified” and “do not cause doubts”.
A theft incident can negatively affect the reputation and credibility of the company, which has already faced the departure of several top managers in recent months. Also, two investors, Molten Ventures and Schroders, lowered the valuation of their shares in Revolut by 40% and 46%, respectively.
