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UK fintech Stenn collapsed into administration after a reference to the company in a US criminal indictment about a Russian money laundering scheme prompted its lenders to begin probing potentially suspicious transactions, according to people familiar with the situation.
Stenn, which specialised in invoice financing and once boasted a $900mn valuation and partnerships with international banks such as Citigroup and Barclays, had two of its UK units placed into administration last week after an application to London’s High Court from HSBC Innovation Bank, one of its lenders.
HSBC began probing potentially suspicious transactions at the London-based start-up earlier this year after US authorities unsealed criminal indictments in a money laundering case that included passing references to Stenn and its Russian founder and chief executive Greg Karpovsky, according to people familiar with the matter.
Stenn’s collapse is likely to cast a spotlight on the due diligence carried out by its banking partners and big investors, particularly as a former auditor of the fintech had resigned over concerns about some transactions and Karpovsky was previously involved in a Russian invoice finance company that later collapsed amid fraud allegations.
Citigroup announced in 2022 that it had formed a partnership with Stenn to “close the financing gap” for small and medium-sized businesses. That same year, US private capital firm Centerbridge Partners invested $50mn in the company’s preference shares at a $900mn valuation.
HSBC Innovation Bank’s exposure to Stenn is primarily through a revolving credit facility signed with Silicon Valley Bank UK, which was taken over by HSBC after the collapse of the US regional bank in 2023.
Stenn and Karpovsky were not accused of any wrongdoing in the US criminal case, in which they were not the defendants.
The references to them in indictments in that case were a trigger for HSBC to begin a deeper examination of the fintech’s dealings that uncovered potentially suspicious transactions, according to the people.
US authorities alleged in one of the indictments that Stenn Assets UK, one of the companies placed into administration, received $1.7mn in October 2020 from a Singaporean company linked to Feliks Medvedev, a Russian citizen who earlier this year pleaded guilty to running an unlicensed money transmitting business that transferred more than $150mn in Russian money.
Karpovsky’s personal email address was listed in another indictment as being linked to a trading account at a Singaporean metals exchange that was used in the scheme.
In addition to Medvedev, US authorities indicted two other Russian nationals for allegedly conspiring in the scheme — charging them with offences including money laundering — while the US Treasury imposed sanctions on one of these alleged co-conspirators and his company last year.
Karpovsky told the Financial Times that he was “co-operating” with Stenn’s administrators and that it “would not be appropriate” to comment on that process.
“However, I am obviously concerned about any allegations of impropriety against me and I deny any wrongdoing in connection with Stenn,” he added.
Citi, HSBC, Barclays and Centerbridge declined to comment. Bloomberg earlier reported that HSBC had discovered questionable transactions at Stenn without mentioning the indictments.
In 2018, Stenn’s auditor EY resigned citing “concerns regarding certain related party transactions” and the “sufficiency of explanations” given by management, according to a publicly filed letter.
Before setting up Stenn in 2015, Karpovsky was the founder and chief executive of Eurokommerz, an invoice finance company that fell into insolvency after defaulting on its debt at the end of 2008.
In 2010, US hedge fund HBK Investments sued Russian investment bank Troika Dialog alleging that Eurokommerz was an “enormous fraud” that was “built on fake clients and non-existent receivables”. Troika, which was a shareholder of Eurokommerz, denied the allegations. HBK later withdrew the New York lawsuit.
Karpovsky told the FT that “any potential wrongdoing in that business is proved to have taken place long after my departure from the company”.
Karpovsky was also a director and shareholder of another UK fintech business that failed this year after potentially suspicious transactions linked to Russia were uncovered.
Silverbird Global collapsed into administration in March after its “management team discovered that certain payments made to its intermediaries made in 2022 and 2023 may be potential breaches of the financial sanctions prohibitions” related to Russia, according to a report from its administrators.
Shortly after Silverbird collapsed, its chief executive 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
https://www.ft.com/content/182839d7-f2d2-4a65-be10-3371630eb59b
