British fintech Stenn goes bankrupt after investigation into Russian money laundering scandal

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British fintech company Stenn fell into administration as lenders began investigating potentially suspicious transactions after the company was mentioned in a U.S. criminal indictment over a Russian money laundering scheme, according to people familiar with the situation.

Stenn, which specializes in invoice financing and once boasted a $900 million valuation and partnerships with international banks including Citigroup and Barclays, was one of HSBC's innovative banks, which closed two of its UK branches last week after applying to the High Court in London. I left it to management. That lender.

Sources familiar with HSBC said potential suspicions were raised at the London-based startup earlier this year after U.S. authorities unsealed a criminal indictment in a money laundering case that included references to Stenn and Russian founder and CEO Greg Karpovsky. I started investigating the suspicious transaction. problem.

Stenns' collapse is likely to put a spotlight on the due diligence carried out by its banking partners and large investors, especially since the fintech's former auditor resigned over concerns about some of its dealings and Karpovsky was previously involved with a later Russian invoice finance company. It collapsed due to fraud charges.

Citigroup announced a partnership with Stenn to close the financing gap for small and medium-sized businesses in 2022. That same year, Centerbridge Partners, an American private capital firm, invested $50 million in the company's preferred stock at a valuation of $900 million.

HSBC Innovation Bank's exposure to Stenn is primarily through a revolving credit facility it entered into with Silicon Valley Bank UK, which was acquired by HSBC following the collapse of the US regional bank in 2023.

Stenn and Karpovsky have not been charged with any wrongdoing in the U.S. criminal case, in which they are not defendants.

Their mention in the indictment in the case prompted HSBC to launch a deeper investigation into fintech trading that uncovered potentially suspicious transactions, according to the people.

U.S. authorities charged that one of the companies under management, Stenn Assets UK, received $1.7 million in October 2020 from a Singaporean company linked to Felix Medvedev, a Russian citizen who pleaded guilty to operating funds without a license earlier this year. A remittance business that transferred more than $150 million in Russian funds.

Karpovsky's personal email address is listed in another indictment as being linked to a trading account at the Singapore Metals Exchange used in the scheme.

In addition to Medvedev, U.S. authorities have charged two other Russians with conspiring in the scheme, charging them with crimes including money laundering, and the U.S. Treasury last year imposed sanctions on one of those co-conspirators and his company.

Karpovsky told the Financial Times he was cooperating with Stenns managers and that it would not be appropriate to comment on the process.

However, I am clearly concerned about the allegations of impropriety against me and deny any wrongdoing involving Stenn, he added.

Citi, HSBC, Barclays and Centerbridge declined to comment. Bloomberg previously reported that HSBC had discovered suspicious transactions at Stenn, without mentioning the details of the indictment.

In 2018, Stenns' auditor, EY, resigned over concerns about certain stakeholder transactions and insufficient explanations from management, according to a publicly filed letter.

Before founding Stenn in 2015, Karpovsky was the founder and CEO of Eurokommerz, an invoice finance company that defaulted on its debt and went bankrupt in late 2008.

In 2010, American hedge fund HBK Investments sued Russian investment bank Troika Dialog, claiming Eurokommerz was a massive fraud based on fake customers and non-existent receivables. Troika, which was a shareholder in Eurokommerz, denied the claims. HBK later withdrew the New York lawsuit.

Karpovsky told the FT that any possible wrongdoing at the business was proven to have occurred long after I left the company.

Karpovsky was also a director and shareholder in another British fintech company that failed this year after potentially suspicious transactions involving Russia were uncovered.

Silverbird Global was placed into receivership in March after management discovered that certain payments made to intermediaries in 2022 and 2023 likely violated financial sanctions embargoes related to Russia, managers report. revealed.

Shortly after Silverbird collapsed, CEO and founder Maxim Faldin, also known as Max Grossman Yavorsky, joined Stenn as the company's new chief customer officer.

Faldin did not respond to a LinkedIn message seeking comment.

Additional reporting by Emma Dunkley

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