Thieves make away with $20m from Revolut following payment flaw
Organised criminal gangs exploited erroneous discrepancies in Revolut’s US and European payment systems to steal more than $20 million in funds.
Payment system errors cost Revolut $20 million
Flaws in the two systems meant that some declined transactions were wrongly refunded, according to the Financial Times. After it was first identified in late 2021, criminals began exploiting the loophole throughout the beginning of last year.
As reported by the newspaper, thieves encouraged individuals to make high-value transactions that would then ultimately be declined. When this happened and the fintech wrongly refunded the sum, the amount would be withdrawn from the receiving account via ATMs, effectively handing the thieves its own money.
A partner bank in the US first raised the red flags after it told the UK-based company that it was holding less cash than anticipated. This led to the flaw being rectified by spring 2022, after the US subsidiary requested fresh cash injections from its parent company.
While Revolut was able to recover some of the wrongly-allocated funds in the aftermath, the damage was already done. According to the FT, the flaw caused a total of $23 million to be stolen, and despite recovery efforts, the fintech is sitting on a $20 million net loss as a result of the error.
These revelations continue to pile the pressure on a fintech once touted as a leading figure in the UK’s prosperous fintech scene. The company reported its first-ever annual profit back in March, when it published a delayed set of results for 2021. However, according to the later findings of auditor BDO, three-quarters of the fintech’s revenues might have been misstated and could not be verified.
And despite hopes of becoming the latest recipient of a UK banking licence, reports followed in May which suggested that the Bank of England was intending to reject its January 2021 licence application over questions relating to the veracity of its accounts and balance sheet.
This battle has resulted in Revolut’s value plunging nearly 40% over the last year following a stake writedown by investment firm Molten Ventures last month and Schroders in April. And now following the announcement of its latest losses, more turbulence could soon be on the horizon for the troubled fintech.
