Fintech Update, 8/1 - 8/7
Hi! It’s Monday, August 8, 2022.
The Rundown
Tough week in the Sherwood Forest: Robinhood was fined $30 million by New York's Department for Financial Services (NYDFS) for compliance failures that caused it to violate the state’s anti-money laundering and cybersecurity requirements. According to NYDFS Superintendent Adrienne Harris, the company “failed to invest the proper resources and attention to develop and maintain a culture of compliance,” only the latest indicator that state and federal regulators across the country are taking increasingly hard looks at the operating practices of fintech firms under their aegis. We’ve written recently about the uptick in regulatory attention on banking services, but Robinhood demonstrates how this interest is not limited to banking use-cases; fintech in general in regulators’ crosshairs.
But wait, there’s more… 😒 Later in the week, Robinhood fired 23% of its staff (about 700 employees), only months after laying off 9% of its staff in late April. In announcing the decision via blog post, CEO Vlad Tenev took a hybrid ‘serious-yet-chill’ tack, explaining that, “in this new environment, we are operating with more staffing than appropriate . . . this is on me.” No offense to Vlad, who we’re sure was trying to strike the right tone, but we doubt that “this is on me” provided any comfort to Robinhoodies, either current or now-former.
The Consumer Financial Protection Bureau (CFPB) is investigating Goldman Sach’s credit card unit “over a range of billing and payments practices.” Goldman announced the news itself, but did not provide specifics about the investigation and did not mention any card line by name. However, as CNBC points out, “most of the bank’s $11.84 billion in card loans through the second quarter were from the Apple Card.”
BlackRock, the world’s largest asset manager, partnered with Coinbase to “offer crypto trading, custody, prime brokerage and reporting capabilities to shared clients.” The move is “a major shift” in BlackRock’s philosophy; Chairman Larry Fink called bitcoin an “index of money laundering” five years ago.
OoOoOh more crypto drama! The SEC charged 11 people for creating a fraudulent crypto scheme that raised $300M from investors. The regulator says Forsage, which claimed to be a decentralized smart contract platform, was in fact a “textbook pyramid and Ponzi scheme” that involved no actual product.
…meanwhile, hackers pilfered $200M from crypto startup Nomad, a so-called blockchain bridge that allows users to transfer tokens between networks; and an attack on Solana has resulted in more than $5 million in losses and counting.
Revolut is bulking up its crypto offering despite broader industry trends: they’ve tripled crypto headcount since July and plan to increase it by a further 20% in the next 6 months. Crypto currently makes up 5-10% of Revolut’s revenue.
Apple fanfic is fifty shades of awesome right now: AltFi speculated about which fintech startups Apple should buy next after purchasing Credit Kudos; and Banking-as-a-Service firm Unit imagined what it would look like if Apple built banking.
Global Payments announced that it is planning to acquire competing SMB payments provider EVO for $4 billion in a cash-and-debt deal. The acquisition will help Global Payments expand into the B2B payments space and grow internationally.
Selected fundings
Digital commercial bank Grasshopper raised $30.4 million in new funding.
Embedded growth capital provider for SMBs ParaFin raised $60 million in Series B funding, and a debt facility of as much as $150 million, at a $520 million valuation.
KYC and PII vaulting provider Footprint raised $6 million in a seed funding round led by Index.
Dubai-based BNPL provider Tabby raised $150 million in debt financing.
Indian rewards-based payment platform Twid raised $12 million in a Series A funding round led by Rakuten Capital.
Payroll compliance platform Mosey raised $18 million in a Series A funding round led by Canaan.
Argentinian payments infrastructure company Geopagos raised $35 million in new funding.