HSBC uncovered potentially suspicious transactions within Stenn that collapsed in December 2024

Stenn, a UK-based fintech company specialising in invoice financing, collapsed into administration in December 2024. This followed an investigation by HSBC triggered by references to Stenn and its founder, Greg Karpovsky, in US criminal indictments related to a money laundering case.

HSBC’s probe uncovered potentially suspicious transactions within Stenn, leading to the freezing of its banking facilities and the placement of its UK units into administration.

The collapse has raised questions about the due diligence practices of Stenn’s banking partners and investors. Notably, a former auditor had resigned earlier due to concerns about specific transactions, and Karpovsky had a history with a Russian invoice finance company that collapsed amid fraud allegations.

This situation highlights the importance of rigorous due diligence in the fintech industry. 

LONGER READ

Stenn: The trade darling wrecked by fraud accusations

• Stenn’s collapse was all the more impactful because it was so unexpected. Launched in 2015, the company reached an over £700 million valuation and provided 800 businesses with £16 billion in financing in just a few years.
• https://businesscloud.co.uk/news/london-fintech-stenn-valued-at-700m-by-series-a-round/
• Stenn was known for providing invoice financing in dozens of markets globally, especially targeting SMEs that struggled to get funding from traditional sources. 
• Stenn gained attention – and investors – for its use of technology, which, it said, provided funding to suppliers faster than competitors.
• In July 2024, CNBC One included the company in its list of the top 250 FinTechs globally.
• It attracted investments from Citigroup, Barclays, Clayhill Capital Partners, and Centerbridge Partners, all of which praised its innovative processes and mission for increasing access to finance. 
• However, it took just one of the investors looking into Stenn’s operations to collapse.
• HSBC Innovation Bank provided Stenn with a £20 million revolving credit facility originally established by Silicon Valley Bank UK, which HSBC rescued in March 2023. 
• https://www.tradefinanceglobal.com/posts/details-and-implications-silicon-valley-bank-collapse/
• HSBC started looking into Stenn’s operations after seeing the company and its CEO, Greg Karpovsky, named in two indictments in the US in October 2024, the Financial Times reported.
• https://www.justice.gov/opa/pr/russian-man-sentenced-running-illegal-money-transmitting-business  
• The indictments of a Russian citizen running an illegal money transmitting system to move over 12 billion Russian rubles (£100 million) linked Stenn and Karpovsky to Singaporean companies used in the scheme – but did not accuse either of any wrongdoing.
• The indictments prompted HSBC to look into Stenn’s clients and raise the alarm after finding that many transactions purported to be with major companies in Japan and Taiwan may have been fraudulent.
• It is speculated that on 2 December 2024, only days after this discovery, HSBC demanded immediate repayment of its credit facility; when Stenn could not comply, the bank filed an application for Stenn to be put in administration, granted 2 days later.
• Stenn reacted to this by claiming its insolvency was due to “sudden action by an investor” and pledged to “actively defend” against it.
• As it stands, Stenn is still under administration. 
• Since the approval of the administration application, worrying new information about Stenn’s activities has come to light, casting doubts on the legitimacy of any of the company’s activities.
• An investigation by Bloomberg found that HSBC’s fears over the identity of some of Stenn’s biggest clients were allegedly justified, meaning some of the company’s largest sources of revenue are now challenged.
• https://www.bloomberg.com/news/articles/2025-01-09/how-fintech-stenn-went-from-trade-darling-to-insolvency-in-days
• Sources told Bloomberg that employees understood that much of Stenn’s income came from a handful of large clients in Japan and Taiwan, termed the “legacy book,” whose accounts were exclusively handled by the company’s upper echelons.
• Since going into administration, however, some of these supposed clients denied ever having had a relationship with Stenn or knowing about its existence, leaving as much as £32 million from unknown, potentially bogus sources. 
• Not only were the invoice owners potentially bogus, but further investigation also pointed to the companies’ purported suppliers, whom Stenn was extending credit to by buying invoices as fronts or misrepresentations. When questioned, several larger companies whose invoices Stenn claimed to be handling denied purchasing goods and services from many suppliers. Karpovsky and Andrey Gurdzhibek, Stenn’s COO, both denied any wrongdoing. 
• https://www.ft.com/content/182839d7-f2d2-4a65-be10-3371630eb59b
• The key question seems to be how Stenn’s fraudulent activities were allowed to go on for so long. The scheme only unravelled because HSBC – one of Stenn’s many investors with no formal auditing responsibilities – serendipitously came across the US indictments, which marginally linked Stenn and its CEO to alleged Russian-backed schemes.
• However, the signs were there long before this. Karpovsky had previously founded Eurokommerz, a Russian invoice finance company that went insolvent in 2008 and was embroiled in fraud lawsuits for years thereafter.
• Karpovksy was also a director and shareholder of Silverbird Global, a UK-based fintech that went insolvent in 2024 due to links to Russian fraud schemes.
• Shortly after its collapse, Silverbird’s CEO, Maxim Faldin, joined Stenn as its Chief Client Officer.
• Stenn’s auditing firm, EY, resigned as early as 2018, citing “concerns” around some transactions and the inadequacy of explanations given by management, as reported by the Financial Times.
• https://www.ft.com/content/182839d7-f2d2-4a65-be10-3371630eb59b
• Red flags were everywhere:
• https://www.bloomberg.com/news/articles/2025-01-09/how-fintech-stenn-went-from-trade-darling-to-insolvency-in-days
• Most of Stenn’s suppliers came from high-risk jurisdictions; many had little to no online presence, and at least one had been deregistered since 2021.
• According to Bloomberg, employers could not recognise over 40% of the firm’s Hong Kong clients and were allegedly warned about deals that seemed too good to be true. It should also have raised eyebrows that the bulk of the company’s revenue came from a few “legacy book” clients who the vast majority of employees could not interact with and knew very little about, making it hard to realise whether they were impersonators. 

Source: 

1. NEWS: Stenn, UK fintech once valued at $900m, collapses after HSBC .... https://www.amlintelligence.com/2024/12/news-stenn-uk-fintech-once-valued-at-900m-collapses-after-hsbc-probes-suspicious-transactions/.
2. Where they went wrong: The collapse of Stenn and Kimura. https://www.tradefinanceglobal.com/posts/where-they-went-wrong-the-collapse-of-stenn-and-kimura/.
3. https://www.tradefinanceglobal.com/posts/uk-invoice-financing-startup-stenn-put-into-administration-after-hsbc-application/