June 28, 2022: -U.K. regulators investigate the CEO of the £3.9 billion fintech firm Wise after tax authorities found he cannot pay a tax bill worth more than £720,000.

Kristo Karmann, the co-founder of Wise in 2011, was fined £365,651 by Her Majesty’s Revenue and Customs, the U.K. government department responsible for collecting taxes for defaulting the tax bill in 2018.

At the time, a company representative said Karmann had submitted his tax returns for the 2017/18 tax year but has since paid what he owed along with “substantial” delinquent filing penalties.

On Monday, according to a statement from Wise, the U.K.’s Financial Conduct Authority extended an investigation into the matter. Regulators are looking into whether Karmann failed to meet regulatory obligations and standards.

Wise said its board is hiring external lawyers to help investigate Kaarmann’s tax violation. The investigation is wrapping up in the fourth quarter of 2021, and its findings were shared with the FCA.

David Wells, chair of Wise’s board, said the company’s management takes Kaarmann’s tax default and the FCA probe “very seriously.”

“After reviewing the matter, the Board required Kristo take remedial actions, including setting professional tax advisors to ensure his tax matters are appropriately managed,” Wells noted.

“The Board has shared details of its findings, assessment, and actions with the FCA and will cooperate completely with the FCA as and when required while persisting to help Kristo in his role as CEO,” Wells added.

The probe could have huge ramifications for Wise and its chief executive. Karmann could be forced to step down and cease working in the industry if regulators rule that he forgets the “fit and proper” test.

The firm’s stock has decreased smartly from its July 2021 debut, losing around 57% of its value.

Wise, competing with the preferences of PayPal and Western Union, made a name for itself by tackling hidden fees in foreign exchange and quickly became a darling of the U.K. start-up scene. The company has since diverged into other finance areas, including banking and investments.