Yesterday, Mercury, which describes itself as a bank for startups, restricted several accounts linked to African tech startups, TechCrunch has learned.
The number of companies involved with this restriction is unknown. But several sources told TechCrunch that they range from a dozen to 30 — including well established YC-backed startups and newer upstarts.
According to our sources, Mercury did not give any prior notice that it would take this action, nor did it explain why the action was taken in its first email to the affected startups.
“Hi, Your access to the Mercury account for [company’s name] has been temporarily restricted. Let us know if you have any question or concerns,” read the first email Mercury sent out.
Upon further questioning, Mercury, which holds over 4 billion in customer deposits for its 40,000+ businesses in over 200 countries, told some of these startups that their accounts had been flagged and placed under review by its compliance team after it noticed some “unusual activity” and couldn’t provide further details until its review was complete.
“We don’t have a definite date for when this will be completed, but we will provide an update as soon as we have one. We’re prioritizing the review of your account with our bank partner. We do apologize for any inconvenience this may cause,” it said in another email.
Some founders and tech stakeholders have taken to Twitter to express their disappointment at Mercury’s decision to block these accounts without any concrete reason. For a number of these startups, Mercury’s restriction came at an inconvenient time — the end of the month — when major obligations such as salaries and taxes ought to be attended to; now, those will have to wait, the founders say.
A couple of founders, who chose not to be named, said Mercury’s move might be linked to the ongoing conflict between Russia and Ukraine, which has seen the company’s partner bank review its exposure to “high risk” regions such as Africa. However, in an email sent to one of the founders whose startup was affected, Mercury tried to point out that its intention wasn’t for the founder and his business to “feel singled out or held to a different standard.”
It’s hard to think that isn’t the case, considering how startups from other regions don’t seem to have experienced a similar problem, judging by activity linked to the situation on Twitter.
A spokesperson responding to TechCrunch’s request for comment said Mercury is aware that one of its backend banks has suspended the accounts of a number of the startup’s customers in Africa. And while the bank was acting in compliance with its internal procedures, the suspension has adversely affected some of its customers.
“It’s top priority for us to work with the bank to resolve this matter as quickly as possible. We’re reaching out to the customers impacted directly and apologize for the disruption this event has caused,” it said in the remainder of the email to TechCrunch.
Meanwhile, CEO Immad Akhund reached out via email to those affected:
I am the CEO of Mercury. Since many of you have emailed/messaged me directly I thought it would be best if I just reached out directly.
We found out yesterday that our partner bank noticed unusual activity and asked us to lock and investigate a large set of accounts with linked activity. We are working through our due diligence on all those accounts and will be in touch with you individually with questions if we have any on your account or activity.
Since it’s a reasonably large set of accounts it’s taking us some time to work through all of them but it’s the highest priority for us internally and we have more than 10 people working on this.
We apologize for this sudden inconvenience and hope to put better practices in place to avoid this in the future. We will be in touch directly as we make progress and feel free to email me on this email if you have follow up questions.