Revolut is said to have lost more than $20m (£15.6m) last year to criminals who exploited a flaw in the fintech company’s US payment system.
The problem, which stemmed from differences between the finance app’s US and European subsidiaries, meant Revolut wrongly refunded accounts when certain transactions were declined, the Financial Times reported.
Revolut declined to comment on the allegations.
The issue first arose in 2021 and criminal gangs began to take advantage of the loophole early last year by encouraging people to make expensive purchases that would be declined before cashing out the refunds at ATMs, it is claimed.
While Revolut managed to claw back some of the stolen funds, it still lost roughly $20m, according to the report.
The loss is alleged to have affected its own corporate funds rather than customer deposits.
Revolut – which offers deposit and payment services, as well as crypto trading – is said to have initially failed to pick up on the issue. It only came to light when a partner bank in the US notified the company that it was holding less cash than expected, according to the report.
The US subsidiary is then said to have requested cash injections of millions of dollars from its parent company before the loophole was closed in spring 2022.
The loss marks the latest setback for the fintech firm, which was set up by entrepreneur Nikolay Storonsky.
The company has faced long delays in securing approval for a UK banking licence. In May, the Bank of England told the Treasury it was planning to reject the application, prompting urgent talks behind the scenes to try and salvage the licence.
Earlier this year, auditors at BDO warned Revolut’s revenues for 2021 “may be materially misstated” owing to flaws in the company’s internal systems.
Several major investors have written down their stakes in the fintech company, slashing billions from its valuation. Revolut last raised money at a valuation of $33bn in July 2021, but the writedowns suggest its value is now roughly half that.
In a further blow, Revolut has been hit by several recent high-profile departures, including James Radford, head of the bank’s UK operations, and chief financial officer Mikko Salovaara.
