Pakistan’s central bank orders fintech Tag to refund customers – TechCrunch

The State Bank of Pakistan, the South Asian nation’s central bank, has ordered fintech Tag to “immediately” refund all funds to customers citing violations of regulatory requirements and “other concerns,” raising existential questions about the startup’s future.

The regulatory action follows a months-long investigation into Tag, which provides banking and financial services to users in Pakistan. The startup has been accused of falsifying documents to the central bank, according to an investor letter obtained by TechCrunch. The central bank did not outline (PDF) which regulatory rules Tag had broken, but set an August 19 deadline for repayment.

Ahsan Khan, co-founder of TAG, accused the startup’s other co-founder Talal Gondal of falsifying documents to the central bank, after discovering the fraudulent act, the bank suspended the startup, he wrote in a letter to investors in June.

“I had come to know about Talal Ahmad Gondal’s unscrupulous and unprofessional conduct while running TAG since March 31, 2022 (and had suspicions and concerns about his conduct long before then and I resigned from the position of Advisor/COO of TAG Pakistan from 1 . April, 2022 when I learned about Talal’s case.), Khan wrote in the letter dated June 16, which was obtained by TechCrunch.

“Currently, I am facing illegal actions by the other founders, Talal Ahmad Gondal and Alexander Lukianchuk, where they have attempted to remove me as a founder and shareholder of TAG Fintech on completely fabricated grounds. It appears that this action has been carried out by both of whom have acted in concert to divert blame and responsibility to me alone, which is quite unfortunate as I have consistently acted as the sensible, wise and prudent founder since the inception of STIKKORD.It is therefore important that our investors, who have invested valuable sums in TAG to create a good enterprise and return on their investment, are made aware of the alarming situation at the moment.”

Tag is one of the fastest growing startups in Pakistan. It was valued at $100 million in its seed funding round last September. The startup counts Liberty City Ventures, Canaan Partners, Addition and Mantis among its backers.

Gondal did not immediately respond to a request for comment.

Further reading: Local journalist Taimoor Hassan has been reporting Tag’s problems for weeks.