By
Chimamanda U. Martha
April 29th, 2024
The Financial Conduct Authority has launched a formal investigation to determine if Kristo Käärmann, CEO of Wise, is guilty of tax violation.
Last September, the HMRC fined Käärmann for defaulting on his taxes in 2018, along with several others. The CEO was fined £365,651 for not paying his 2017/2018 taxes as due. In his defense, a company spokesperson affirmed that Käärmann submitted his 2017/18 tax returns late. However, he also noted that Käärmann had paid all he owed, with penalties.
Afterward, the money transfer company opened its internal investigation into the matter. The company concluded its investigation at the end of the fourth quarter of 2021. This was then submitted to the FCA. Now, the FCA has opened fresh investigations to determine if Käärmann violated the regulations guiding his obligations as CEO.
Recently, Do Kwon, CEO of Terraform Labs, was found guilty of a similar violation. The Korean financial watchdog fined Do Kwon and Terraform Labs about 10 billion won before the Luna ecosystem collapsed. However, Do Kwon refuted all allegations of tax evasion.
Wise Will Cooperate with the FCA
Chairperson of the Wise management board, David Wells, noted that the firm was taking the tax case and probe very seriously. He pointed out that the firm had already taken active steps to remedy the matter, encouraging its CEO to appoint professional tax advisors to handle his taxes.
Wells also reiterated that the firm was committed to cooperating with the FCA. While noting they had shared past findings, assessments, and actions with the FCA, he said the firm will continue to support the regulatory watchdog in its activities. He also noted that they would continue to support Kristo in his role as CEO.
Should the CEO be found guilty of financial impropriety, Käärmann may be forced out of his role as CEO and the entire industry. The probe could also impact the company’s stock which has already lost 57% of its value. At the time of writing, the stock price was down another 1.39% today and was trading at 376.20 GBP.
Since launching in 2021, Wise has positioned itself as a veritable competitor for PayPal and Western Union in the UK. The company has also delved into other aspects of the market including banking and investments.