2024 was a challenging year for Lithuania’s fintech landscape, marked by high-profile scandals, regulatory scrutiny and significant market shifts.
Jekaterina Govina, an ex-regulator of the Lithuanian financial market and a prominent figure in the country’s fintech scene, provided insights into key events that shaped the industry, highlighting the collapse of Foxpay, the bankruptcy of fintech darling Kevin, and intensified anti-money laundering (AML) enforcement, as major developments in the ecosystem in 2024.
The Foxpay scandal
The Foxpay scandal emerged as one of the most prominent financial investigations in Lithuania’s financial sector.
Allegations of money laundering, fraud and corruption dominated the narrative, and in October, pre-trial investigations led to the detention of seven individuals, including Ieva Trinkunaite, Foxpay’s owner; her partner Vilhelmas Germanas; and Mindaugas Navickas, the husband of former Social Security Minister Monika Navickiene.
The investigation established that the suspects had laundered EUR 17 million between 2023 and 2024, paid over EUR 100,000 in bribes to AML officers, and misappropriated ownership of foreign cryptocurrency mining equipment worth EUR 24 million, reported Lrt.lt.
Authorities seized EUR 500,000 million in cash, cryptocurrencies and luxury goods, with assets valued at around EUR 3 million.
The Bank of Lithuania revoked Foxpay’s Electronic Money Institution (EMI) license on November 22. Founded in 2009, Foxpay provided various payment services. Notably, the company acted as a payment intermediary for various state institutions via the CENTROLink system.
The end of Kevin
Once seen as Lithuania’s next unicorn, payment software startup Kevin declared bankruptcy in September 2024 The Vilnius District Court formalized the bankruptcy, and the Bank of Lithuania subsequently revoked the company’s Payment Institution (PI) license.
Prior to its failure, Kevin had positioned itself as an innovator in the fintech space, offering a brand-agnostic white-label account-to-account (A2A) payment solution. The solution was designed to bypass traditional card networks, reducing costs for merchants and streamlining payment processes by allowing consumers to pay directly from their bank accounts.
Despite having raised approximatively US$75 million in venture capital (VC) funding, Kevin failed to establish a sustainable business model.
An analysis by Flagship Advisory Partners, a Dutch consultancy and mergers and acquisitions advisory firm, highlighted structural issues with Kevin’s business model, including high friction, usability limitations, and low margins.
Expansion efforts were poorly executed, leading to wasted resources, while regulatory challenges, including delayed annual reports, prompted the Bank of Lithuania to block Kevin from taking on new clients in July 2024.
According to Flagship Advisory Partners, Kevin’s bankruptcy underscores the revenue model challenges of A2A payment systems, particularly in physical environments. It also highlights the criticality of strategic partnerships, robust margins, and executional efficiency to thrive in the competitive payment landscape.
A decline in fintech licensing
One particular trend observed by Govina in 2024 is the slowdown in new fintech license approvals, with only a few notable developments in the financial sector. Among them, DriveWealth stood out by securing a financial brokerage license. This startup provides an innovative software-as-a-service (SaaS) solution for brokerage firms to offer fractional shares trading.
Another significant development involved fintech company ABC Projektai. The company, which operates under the trademark Bruc Bond, achieved a significant legal victory, with the Court of Justice of the European Union (EU) and the Supreme Administrative Court of Lithuania (SAC) ruling in July 2024 that the Bank of Lithuania had wrongly revoked its license. The license was reinstated thereafter.
Bruc Bond operates as a payment institution, providing services such as online transactions and payment processing.
AML compliance challenges
In contrast to Bruc Bond, UAB Finolita Unio’s appeal to overturn the Bank of Lithuania’s 2021 decision to revoke its license was definitively rejected by SAC in November 2024. The court upheld the central bank’s findings, which include eight serious violations among which failures in money laundering and terrorist financing prevention, as well as breaches of capital requirements.
Several fintech companies saw their licenses revoked last year over failures in AML and countering the financing of terrorism (CFT) prevention. Majestic Financial’s license was revoked in April, accompanied by a EUR 50,000 fine for a former board member.
Meanwhile, Phoenix Payments, an EMI in Lithuania, was fined a whopping EUR 970,000 for significant breaches in AML and CFT regulations, according to Lithuanian law firm Ecovis ProventusLaw.
The company, which offers alternative banking and payment solutions, relied on partners for AML/CTF measures whom were found to be ineffective, especially for high-risk clients and international correspondent relationships.
Since 2022, six electronic money or payment institutions have lost their operating licenses for serious violations of money laundering and terrorist financing prevention, and more than twenty participants have been fined over EUR 4 million, according to the Bank of Lithuania.
Solaris exits Lithuanian market
2024 also saw the exit of German embedded finance platform Solaris from the Lithuanian market. The company announced in September a series of restructuring efforts, including the discontinuation of “major parts” of its EMI business formerly known as Contis, a UK-based company with a license in Lithuania.
Solaris said it had been through “some tough times” amid the loss of key partners and troubles signing new businesses. However, it is now “on the right track” after making job cuts and structural changes, Tech.eu reported.
The closing of the Lithuanian business came amid increased scrutiny. In November 2023, the company was fined EUR 840,000 by the Bank of Lithuania for failing to comply with the requirements for the prevention of money laundering and terrorist financing, as well as information security and business continuity risk management.
Crypto providers prepare for MiCA
In 2024, crypto companies prepared for the landmark Markets in Crypto Assets Regulation (MiCA). The regulation, which officially applied from December 30, 2024, establishes uniform operational requirements for crypto-asset service providers across the EU. Its goals are to encourage innovation in the crypto sector while maintaining financial stability and protecting consumers from potential risks.
Though MiCA includes a transitional period until July 01, 2026 to allow service providers to adapt to the new requirements, Lithuania proposed a shorter transitional period until June 01, 2025, citing risks of money laundering, terrorist financing, circumvention of international sanctions and fraud inherent to the emerging sector.
Over the past years, Lithuania has seen its crypto sector surge. According to data from the Lithuanian company register, there are now more than 700 Virtual Currency Exchange Operators and Depository Virtual Currency Wallet Operators in the country.
Lithuanian fintech ecosystem welcomes new prominent members
In 2024, the Lithuanian fintech ecosystem welcomed new prominent members. Mykolas Majauskas, a former member of Parliament, was elected in September as a member of the board and the president of the Crypto Economy Organisation.
The Crypto Economy Organisation is an independent, government-supported association established to represent the interests of the crypto economy professionals.
Majauskas brings extensive expertise from a career spanning international banking, real estate, and public service. His professional experience includes roles at Barclays Capital in London, Cushman & Wakefield in Sydney, and various positions in the Lithuanian government. Last year, he took part in the Vilnius mayoral elections, where he finished third.
Meanwhile, Gintare Verbickaite-Baciuliene, the winner of this year’s Lithuanian Fintech Leader award, was named the new CEO of Unicorns Lithuania. Unicorns Lithuania is an association established in April 2021 that units more than 110 tech startups.
Verbickaite-Baciuliene has over 15 years of experience in business and startup consulting, economic development and foreign direct investment attraction. During her highly successful career, she has worked in the private, public and non-profit sectors in Australia, Estonia and Lithuania.
Lithuania and South Korea formalize collaboration
Finally, 2024 saw Lithuania strengthen its fintech ties globally. In October, the country inked a partnership with South Korea to promote the development of innovative services and exchange knowledge on financial market trends.
Featured image credit: edited from freepik
