Hackers stole $20 million from Revolut 😳; Another master move from Square (& Block) 🥊; Crypto trading volumes rose for the first time in 3 months 📈

FinTech is Eating the World, 10 July

Hey Everyone,

Happy Monday! I hope you had a relaxing weekend because we’re starting a new week with some spicy FinTech stuff 👀 Today we’re looking at how hackers stole $20M from Revolut (less money but more problems + a closer look at chaos at Revolut), another master move from Square/Block (& a deep dive into how they are building the ecosystem of ecosystems), and crypto trading volumes that rose for the first time in 3 months (time for laser eyes & lambos again?). Let’s jump straight into the interesting stuff 🌶

Hackers stole $20 million from Revolut 😳

The BIG news🚨 Malicious actors exploited a fault in Revolut's payment processing system to steal more than $20 million from the financial super app in 2022, the FT has reported.

More on this 👉 The fault stemmed from discrepancies between Revolut's US and European systems, causing funds to be erroneously refunded using its own money when some transactions were declined, says the FT, citing multiple anonymous sources.

The problem was first detected in late 2021. But before it could be closed, the report said organized criminal groups leveraged the loophole by "encouraging individuals to try to make expensive purchases that would go on to be declined." The refunded amounts would then be withdrawn from ATMs.

The exact technical details associated with the flaw are currently unclear.

In total, about $23 million was stolen, with some funds recovered by pursuing those who had withdrawn cash. The mass fraud scheme is said to have resulted in a net loss of about $20 million for the neobank and fintech firm. Ouch 🤕

✈️ THE TAKEAWAY

WTF (What the FinTech)? 🤔 Revolut has yet to comment on the breach. Well, that’s pretty obvious as a $20M loss is equal to almost 2/3 of its annual net profit in 2021 🤷‍♂️ On a serious note, this is yet another proof that most of the FinTechs have to learn about payment fraud the hard way. And Revolut has been learning quite a few hard lessons in recent months - it has seen several big departures, an audit by regulators, and a drop in valuation as it eagerly awaits a British banking license…

Go deeper here: Chaos grips Revolut's fate 😳 [+3 more reads]