AstroPay, another of the companies that own Sergio Fogel and Andrés Bzurovski, owners of the first unicorn Uruguay, dLocal, received restrictions from regulators United Kingdom, due to the million-dollar debts that the company had financial technology with clients, as well as irregularities in the protection of transactions.
The Financial Conduct Authority British (FCA, for its acronym in English) prohibited Larstal Ltd. — which operates as AstroPay and is part of a global payments empire overseen by Fogel and Bzurovski — the ability to provide payment services or accept new customers without written approval from the watchdog.
The action is part of a strategy by the regulator to improve standards among the fintech: As reported by Bloomberg, the agency has authorized dozens of EMIs, including AstroPay, to operate in the United Kingdom in recent years, but is now concerned that the sector is plagued by fraud and poor crime controls.
In a statement, Fogel explained that the decision to suspend the company’s EMI license was “mutually” agreed between the FCA and AstroPay, as it “was not necessary to conduct its business at this time.” An AstroPay spokesperson said separately that the company had “voluntarily imposed restrictions to improve operational capabilities.”
The restrictions were imposed through a “voluntary commitment,” something that is usually not “genuinely on the company’s own initiative,” he said. James Borley, former FCA regulator and managing director of Cosegic Ltd. “Rather than taking the firm through a formal process, resulting in the issuance (and publication) of a formal supervisory notice, the FCA will normally ‘persuade’ the firm itself to apply for a restriction on its permission” , he explained.
AstroPay owed several million dollars to customers at the end of 2022, filings show, and the company must also ensure that “all relevant funds are appropriately protected,” according to the FCA. Fogel and Bzurovski’s company processes transactions for clients in industries including online gambling, currency trading and adult entertainment, filings show. Most of its business is in emerging markets such as Brazil and India.
The license requested for dLocal
Although both fintech have no greater relationship than having the same owners —Fogel, in addition, currently holds an administrative position on the board of directors of the Uruguayan unicorn—, it is inevitable to think about possible consequences that dLocal may have in its operations from the decision of the FCA.
In that sense, it is worth remembering that the payment processing company had requested a full license from the British regulatory body after the scandal generated by the report of Muddy Waters Capital, at the end of 2022. It may be significant that AstroPay’s debts occurred around the same time.
Meanwhile, the actions of dLocal They have been declining for nine consecutive weeks and are currently trading below $8, around $7.60 and heading towards a tenth week within the negative trend. The market reaction is due to the fact that the company announced the loss of profits in March and then, in May, reported a 50.1% year-on-year drop in its profits during the first quarter.
Source: Ambito
