African Fintechs Face Worrying Losses As Breaches & Hack Attacks Spike

By  |  June 19, 2023

Glade, a fledgling Nigerian fintech startup backed by Techstars, experienced an internal breach, according to two sources familiar with the matter, reports TechCabal. These sources revealed that the breach resulted in a financial loss of USD 214 K.

Liyi Victor, the CEO of Glade, acknowledged the breach when contacted but did not disclose the exact amount that was lost. Liyi stated that the attackers managed to infiltrate the company’s backend infrastructure and successfully absconded with the funds. The incident has been reported to relevant law enforcement authorities.

Glade emerged as a noteworthy participant in the Techstars Toronto spring program of 2022, where it stood alongside six other promising African startups. Having made some headway in building an all-in-one business finance solution for SMEs encompassing issuing accounts for global transactions, payments, cash flow, and expense management tools, Glade successfully raised a substantial funding amount of USD 435 K during the program’s highly anticipated demo day.

However, in a surprising turn of events, An investigation into the matter revealed that the accelerator, Techstars, had remained unaware of the internal breach that befell Glade, TechCabal found. The details surrounding this incident, highlighting the breach’s impact and its implications, add a layer of complexity to this unfolding narrative.

According to insider sources, the breach at Glade that took place in 2022 was attributed to a former employee. Disturbingly, the company has revealed that this ex-employee is currently evading authorities. Beyond the hack, there are also reports the situation at Glade is exacerbated by a separate fallout at the helm that resulted in the exit of one Temotope Hundeyin, one-half of the founding pair, under less than amicable circumstances.

Glade’s recent breach adds to the growing list of cyber attacks targeting Nigerian financial service providers over the past year. News of a few other similar occurrences have entered the public domain in recent months; Patricia, a crypto startup, fell victim to hackers in 2021, resulting in a loss of USD 2 M, according to reports that emerged in May, while the company seeks to bring the perpetrators to justice through legal proceedings.

Furthermore, in April, African fintech champion Flutterwave was at the centre of a controversy that suggested hackers had targeted the company and made away with around USD 6 M. Although Flutterwave has consistently denied this, there are hard-to-ignore signs that some strange activity may have occurred.

In addition, it emerged in June 2022 that MoMo Payment Service Bank, the new financial services subsidiary of leading telecoms company MTN Nigeria, suffered a breach in the last week of May 2022, just days after launch, reportedly losing NGN 22 B (USD 53 M). News reports about the breach cited a court filing that shows MoMo PSB requesting each of the 18 banks where the funds were traced to, to explain how much of the money they received in their customers’ accounts.

Stakeholders in the African digital financial services (DFS) sector are increasingly recognizing cyber attack risks as a significant concern more than ever before. This shift in focus highlights the critical need for stakeholders to elevate their cybersecurity efforts and strategies.

With the escalating frequency and sophistication of cyber attacks, the industry now faces an ever-rising need to prioritise robust security measures to safeguard sensitive financial data and protect against potential breaches.

By acknowledging the gravity of cyber threats and taking proactive steps to enhance cybersecurity, stakeholders can effectively mitigate risks and ensure the resilience and stability of the African fintech landscape.

Featured Image Credits: The Economic Times

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