FINCY, a Singapore-based fintech startup, is pulling out of a new Myanmar border city, amid allegations that it is being used to prevent law enforcement from tracking financial transactions in the city.
Its app, which enables users to perform currency exchange and pay merchants in various countries, is said to be the exclusive provider of financial infrastructure to Yatai City's 40,000 residents, who use the app to make purchases, perform transactions, receive salaries and manage their expenses digitally.
According to reports by The Straits Times in August, about 90 per cent of the shops in Yatai city use the app for transactions - and this is unusual because Myanmar people have famously preferred to do their transactions in cash, even for big-ticket items.
Recent reports by the United States Institute of Peace, a US Congress-funded body, have raised concerns that Yatai City, also called Shwe Kokko, is being developed as a front for large-scale gambling activities. The city, located on the border with Thailand, is a site of a US$15 billion gambling-centered project under construction, and seems primed to operate outside of Myanmar law, alleged the report, which was published in July.
The report suggested that the Building Cities Beyond (BCB) blockchain, the blockchain infrastructure for the development of applications such as digital wallets, secure payments systems, is central to the plan.
Since Fincy is built upon the BCB blockchain, the report implied that it can use encryption with "no location transactions" to obfuscate the origin of a transfer and ensure absolute privacy for the residents in the city.
Fincy said in a statement on Wednesday that it refutes all claims of nefarious dealings and practises zero tolerance towards illegal activities and unethical practices.
The startup was co-founded last year by Singapore entrepreneur Douglas Gan; he is also the chief executive and co-founder of GBCI Ventures, the venture capital firm that injected US$100 million into the BCB blockchain initiative on the stated aim of supporting smart-city solutions.
In June, Fincy received a US$11 million injection from parent GBCI to "expand its market presence, build new headquarters and expand its data centre network across Asia".