Posted In:

Fraud, PPP, Covid, Lending


#431
Fooling The System

Published:

Apr 02, 2022


Author:

Roxy Horrie

Posted In:

Fraud, PPP, Covid, Lending

Published:

Apr 02, 2022


Author:

Roxy Horrie


Share:

Swindling COVID relief plans have proven to be one of the most lucrative endeavors in the history of fraud, even more so than the Tinder Swindler. In December, the US Secret Service said that criminals have stolen over $100b dollars between the Paycheck Protection Program (PPP), the Economic Injury Disaster Loan program and more.

The methods of fraud varied - creating nonexistent businesses and assuming unemployed identities being the most common. Automated relief distribution and online applications only allowed more fraudsters to access funds without proper eligibility. The case of COVID theft begs this question: can we have speed and convenience alongside legitimacy and security?

As digital payments and authentication continue to become the primary mode of transaction for many, fraud prevention technology is on the rise to screen for bad actors. According to Pitchbook, companies that touched ‘fraud’ raised a total of $8.3b across nearly 400 deals in 2021, up from $3.4b in 2020.

So far, 178 people have been convicted for PPP fraud cases, according to the Justice Department - including the Californian rascal who applied for $27m in forgivable debt. Many of them used relief funds to purchase luxury automobiles, vacations and property - perhaps Netflix will now have a solid follow-up to the Tinder Swindler?

Portfolio News


Buidling our Web3 future - Transitioning from building tech & companies into VC creates a unique opportunity to see new companies through an entirely different lens, one that's empathetic to the founder and cognizant of the trends creators are following. Fresh from participating in the ETH Denver hackathon, building 2 hacks, and winning the DeFi track, William Starr, Technical Lead of FTC's DeFi Fund, spent some time to reflect on what is next for building in web3. Read more

Goldman to acquire NextCapital in latest push to diversify - Goldman Sachs is buying NextCapital, a robo-adviser that specializes in workplace pensions, as part of chief executive David Solomon’s push into businesses with steadier income streams including asset and wealth management. Chicago-based NextCapital directly advises retirement plans as well as supplying its underlying technology to other financial institutions under a “white label”. Sponsors of defined contribution retirement plans use NextCapital’s digital advice to help employees customize their savings and investment options. Read more

NOT an April fools - Introducing Willa Air, the world’s first airline for creators! - Portfolio company Willa (superfast payments for creators) announced this week the launch of Willa Air, the first airline designed exclusively for creators. That’s right, they started an airline that will service creators traveling nationwide for events like music festivals and fashion week. Share the news with all your influencer buddies! Read more

Berlin-based startup fuels no-code NFT platform for creators with €1.5m - Aiming to become the ‘Shopify for NFTs’, Berlin-based technology company FUEL has raised €1.5m. The pre-seed round saw the participation of investors, including NYC-based FintechCollective, London-based Seedcamp and Notion Capital with their pre-seed vehicle, Pioneers. Angels and experts, including Bitstamp CTO David Osojnik, Gumtree co-founder Michael Pennington and Indeed founder Paul Forster also joined the round. Read more

Flutterwave backs UK fintech company Dapio in $3.4m round for its contactless payments play - African payments giant Flutterwave co-led the growth round with Techstars. Daniel Gould, venture partner at Asymmetry Ventures, and PactVC participated. Formerly Paymob — not to be confused with the Egyptian payments processor of the same name — Dapio allows businesses to accept cashless payments in-store as its technology converts the back of any Android smartphone into a direct card reading terminal. Read more

Bitcoin miner Iris Energy secures $71m in equipment financing from NYDIG - The company used 19,800 Bitmain S19j Pro miners to secure the loan, which has a 25-month term and an 11% interest rate. Iris Energy has previously raised over $500m in funding, including $115 million in debt issuance last year, before upsizing its initial public offering on Nasdaq to $231m. Read more

Fountain, CO joins Colorado Springs as an Underline community - In 2020, the City of Fountain started looking for a provider to deploy a community-wide broadband network. Underline answered the call and proposed an open access fiber network to provide gigabit+ connections to residents and businesses, as well as service to the City of Fountain. With a series of agreements now in place, construction is set to begin this Spring, and will be Underline's second open access network in the U.S. Read more

OpenSea confirms it will start listing Solana NFTs in April - Solana is the second-largest NFT ecosystem behind Ethereum, with an estimated market cap of $1.5b across its myriad collections. The Solana NFT space grew rapidly last fall on the back of rising collections like Solana Monkey Business, Degenerate Ape Academy, and Aurory. Solana offers faster, cheaper, and more energy-efficient transactions than Ethereum’s mainnet. Read more

Fooling The System


'Biggest fraud in a generation': The looting of the Covid relief plan known as PPP - Many who participated in what prosecutors are calling the largest fraud in U.S. history — the theft of hundreds of billions of dollars in taxpayer money intended to help those harmed by the coronavirus pandemic — couldn’t resist purchasing luxury automobiles. Also mansions, private jet flights and swanky vacations. Read more

California man convicted of using $27m in PPP loans for personal use, including renting oceanfront property - According to a release from the DOJ, 53-year-old Robert Benlevi submitted 27 Paycheck Protection Program loan applications to four banks between April and June of 2022 on behalf of eight companies he owned. The DOJ said he sought a total of $27m in forgivable PPP loans guaranteed by the Small Business Administration under the Coronavirus Aid, Relief and Economic Security Act. Read more

Industry News


Apple working to bring more financial services in-house - A multiyear plan would bring a wide range of financial tasks in-house, which includes payment processing, risk assessment for lending, fraud analysis, credit checks and additional customer-service functions such as the handling of disputes. Read more

Museums are cashing in on NFTs - Same-size digital versions of the Leonardo portrait, Caravaggio’s “Bowl of Fruit” and Raphael’s “Madonna of the Goldfinch” were offered in editions of nine, ranging in price from €100,000 to €500,000 per piece showing that there is money to be made. However, most institutions are still wary of getting involved. Read more

Egypt launches national system for instant payments - The Central Bank of Egypt announced the official launch of the national system for the instant payments network and the InstaPay application for banking sector customers: allowing financial transactions to be conducted electronically and instantly. Read more

Barclays to take £450m hit on ‘bizarre’ bond blunder - The firm issued about $36b of investment products after registering with U.S. regulators in August 2019 to sell up to $20.8b. The error will require the firm to repurchase affected securities -- a so-called rescission offer -- at their original price. Read more

SEC proposes new disclosure requirements for SPACs - The proposed rule would hold SPACs and the companies they acquire to similar standards as traditional IPOs, SEC officials said. Under the proposal the SEC is considering, blank-check companies would have to disclose information about their sponsors’ compensation as well as the dilution that shareholders might suffer if an acquisition is completed. Current rules often allow SPAC insiders to multiply their initial investment even if the companies they take over—and other shareholders—struggle. Read more

Robinhood adds four additional hours to extended trading for clients - As some Robinhood clients head back to the office following the pandemic, the stock trading app — which has experienced a slowdown in volume this year — is now offering extra hours in the morning and evening for its investors - now providing trading from 7 a.m. to 8 p.m. ET. Read more

Papaya Global to buy Azimo for $150m-$200m to expand its payroll payments to more markets - Six months after raising $250m, Papaya Global is making a key acquisition to expand its cloud-based HR and payroll platform globally on the heels of major surge in remote working. The Israeli startup is acquiring Azimo — the London-based money transfer business that Facebook once tried to buy to spearhead its own remittance efforts — a deal that will see Papaya Global moving into more markets, and launching more services such as instant payroll payments. Read more

A new bill would launch a large-scale test of digital dollars - The Electronic Currency and Secure Hardware (ECASH) Act, introduced by Rep. Stephen Lynch (D-MA), would direct the Secretary of the Treasury to publicly test an “electronic version” of the US dollar. While the bill’s odds of passing likely remain low, it demonstrates governments’ increasing interest in launching alternatives to cryptocurrency. Read more

Trade your crypto, buy your NFTs, and pay your taxes - The question about whether you made money on cryptocurrency is even higher on your tax form than the line for your wages. There are new tools to help you get it right. Read more

Danish neobank Lunar offers to buy Norway's Instabank for ~$150m - Lunar's offer for the deal was 3.75 kroner a share, which represents a 56.3% premium on Instabank's closing share price on March 25. Lunar already has a footprint in Denmark and Sweden, but the acquisition would expand its presence in Norway while also opening the door to the Finnish market. Read more

Finnosummit Mexico early bird tickets now available! - This conference returns on June 1-2 as a unique opportunity to learn about the trends that will mark the future of the financial market. Speakers of international stature will share their vision on the evolution of the Fintech industry and thousands of attendees from the Fintech ecosystem to meet and create value connections. Read more

Revolut gears up for move into Brazilian market - UK-based financial superapp Revolut has hired BTG Pactual's Glauber Mota to lead its move into the Brazilian market. Revolut is entering a thriving fintech arena in Latin America's largest market, joining local giants such as Nubank, Neon, Ebanx, C6 and Creditas. Read more

Americans were great about paying their debts in the pandemic. Don’t expect it to last - By the end of last year, U.S. banks’ charge-offs of credit card loans had dropped to the lowest rate since at least the mid-1980s—an annualized rate of 1.57% of balances, according to Federal Reserve data. The WSJ warns that this may not last. Read more

Select Financings


Anyday - Denmark based BNPL company raised €4m in Seed funding from Inventure. Read more

Archie - New York City based freelancer pay company raised $5m in new funding led by B Capital Group. Read more

ArK Kapital - Stockholm based alternative financing company raised €15m in Seed funding led by Local Globe. Read more

Blockchain.com - London based digital assets platform raised an undisclosed amount of growth funding at a $14b valuation led by Lightspeed Venture Partners. Read more

Blur - Bahamas based NFT marketplace for professional traders raised $11m in Seed funding led by Paradigm. Read more

BoostUp - California based revenue operations and intelligence platform raised $29m in Series B funding led by NGP Capital. Read more

CARD91 - India based payment infrastructure platform raised $13m in pre-Series A funding led by Infinity Ventures. Read more

Cross River Bank - New Jersey based digital bank that offers payment and lending APIs to others raised $620m in Series D funding led by Eldridge and a16z. Read more

Data Vault Holdings - New York based data tokenization company raised $31m in Series A funding led by undisclosed investors. Read more

DFlow - Remote decentralized protocol for order flow markets raised $2m in Seed funding led by Multicoin Capital and Framework Ventures. Read more

Effectiv - San Francisco based risk management platform for financial companies raised $4m in Seed funding led by Accel. Read more

Equi - California based remote investing platform focused on alternative investments raised $10m in Seed funding led by Foundation Capital. Read more

GrowSari - Manila based small business digitization platform raised $78m in Series C funding led by the IFC. Read more

Home365 - San Jose based real estate investment and property management company raised $26m in Series B funding led by Viola Growth. Read more

January - New York based debt resolution platform raised $10m in new funding led by Brewer Lane Ventures. Read more

Khazna - Egypt based financial super-app raised $38m in Series A equity and debt funding led by Quona Capital. Read more

Latitud - Latin America based cap table management company raised $12m in Seed funding led by a16z and NFX. Read more

LayerZero Labs - Vancouver based protocol to connect decentralized apps across multiple blockchains raised $135m in growth funding led by Sequoia Capital, FTX Ventures, and a16z. Read more

Leal - Colombia based consumer fintech company raised $10m in Series A funding led by Rakuten Capital and IDC Ventures. Read more

Modern Treasury - San Francisco based payments infrastructure company raised $50m in Series C funding led by SVP Capital and Salesforce Ventures. Read more

Mosaic - San Diego based strategic finance company raised $25m in Series B funding led by Founders Fund. Read more

Nova Labs (f.k.a. Helium) - San Francisco based network of 500K+ cryptocurrency-mining hotspots offering p2p networking raised $200m in Series D funding led by Tiger Global. Read more

Pine Labs - Bengaluru based digital payments provider raised $50m in growth funding led by Vitruvian Partners. Read more

Poplar Homes - California based proptech for single-family rental investors raised $53m in Series B funding led by LL Funds. Read more

Sprout - Hong Kong based provider of cap table software raised $3m in Seed funding led by Sequoia Capital India. Read more

TransFICC - London based electronic trading company raised $17m in Series A funding led by AlbionVC. Read more

Wert - Estonia based payments gateway that enables direct NFT purchases with credit cards raised $5m in Seed funding led by Tagus Capital. Read more

Yokoy - Zurich based spend management platform raised $80m in Series B funding led by Sequoia Capital. Read more

Yonder - London based lifestyle credit card company raised £20m in new funding led by Northzone and LocalGlobe. Read more

Zepto - Australia based account-to-account merchant payments company raised A$25m in Series A funding led by AirTree Ventures and Decade Partners. Read more


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