Until you’ve stayed on Elon Musk’s social media platform, X – beforehand often known as Twitter – you in all probability missed a rare rant from US investor Keith Rabois claiming that “Airwallex has become a Chinese backdoor into sensitive American data like from AI labs and defense contractors”.
The previous PayPal exec – sure he’s a part of the PayPal mafia, with Musk and US vice-presidential puppet grasp Peter Thiel – is MD at California VC Khosla Ventures. Final night time, he fired up each thumbs to hold on like a short-seller gagging for a bear market, ripping into Airwallex, a competitor to his agency’s portcos, Stripe and Block (proprietor of Afterpay).
The opening salvo was provoked by Airwallex cofounder and CEO Jack Zhang’s submit a month in the past that the fintech had hit $1 billion in ARR.
Rabois teed off at Zhang within the first of six tweets, with “Cool growth chart. Have you disclosed to US customers like @Rippling, @Billcom, @TheZipHyouQ, @brexHQ, and @Navan that you’re quietly sending their customers’ data to China?”
Central to his thesis is that whereas the corporate is now primarily based in Singapore, Airwallex has “multiple points of vulnerability”- “your China-based ops, infra, and investors create legal obligations to assist with CCP espionage upon request”, accusing the corporate of hiding it from the fintech’s prospects, whereas “the bulk of its operations and core staff are in China’s jurisdiction. Airwallex has 1,700 employees globally; roughly 40% and its largest offices are in mainland China and Hong Kong, including core engineering and ops.”
“Because of you, the Chinese language authorities now has direct, covert, legally enforceable entry to delicate monetary data belonging to America’s AI labs, protection contractors, monetary establishments, healthcare corporations, and Fortune 500s, Rabois wrote.
“Maybe this wasn’t your intent when you started the company, but it’s clear you’ve allowed this to happen.”
It began what Musk’s Nazi porn bar thrives on – a dumpster hearth of arguments forwards and backwards, raging within the machine, whereas Zhang and his cofounder, Lucy Liu weighing in to disclaim the claims, in addition to chief product officer Shannon Scott.
Return hearth
“It’s disappointing to see an investor circulating inaccurate claims to give a portfolio company an edge in competing,” Zhang responded.
“Airwallex operates below strict international data-residency and safety frameworks. No U.S. buyer knowledge is distributed to China. Full cease. Similar to Apple, Tesla, and Microsoft. We rent the perfect expertise globally. However the place our engineers sit is completely different from the place your knowledge sits and who has entry to that knowledge. US buyer knowledge is saved in US, Netherland and Singapore knowledge facilities and topic to strict safety and entry controls. No members of Airwallex China or Hong Kong entities have entry to US buyer PII.
“We hold 70+ licenses globally and regulated in over 48 states in the United States. We do not answer to foreign intelligence demands for non-local sensitive data, our technical and legal structures prevent that cross-border reach. We comply with US federal requirements with respect to China and Hong Kong access to US sensitive personal information. Our leadership team operates across the U.S., Europe, Singapore, and Australia. And for what it’s worth, the entire London tech ecosystem knows I live in Holland Park.”
Shannon Scott responded to his boss, sayings that: “Airwallex will continue to build data centers that isolate customer data into their respective region, going beyond regulatory requirements and customer expectations. Many of our customers are multi-national themselves, so creating customer choice will also be key.”
Airwallex CEO Jack Zhang. Photograph: equipped
Lucy Liu returned hearth saying “the allegations and inaccurate narrative here align closely with the interests” of a Khosla portfolio firm, including that Airwallex’s “legal structure and technical architecture are intentionally designed to prevent cross-border data access, regardless of where engineers are located”.
Liu stated Airwallex is below steady oversight from U.S. and worldwide regulators about its knowledge privateness.
“Airwallex’s position is absolutely clear. Airwallex operates under rigorous global data-residency and security standards that comply with all U.S. federal requirements, including those governing access to sensitive personal information,” she stated.
U.S. buyer knowledge is saved completely in knowledge facilities within the U.S., the Netherlands, and Singapore and isn’t transferred to China. Similar to Apple, Tesla, and Microsoft. We rent the perfect expertise globally. Staff in China or Hong Kong wouldn’t have entry to U.S. buyer PII.”
China-born Liu, who moved to New Zealand aged 12 and grew up there, additionally took Rabois up on accusations that’s she’s China-based, ending off “And since my residency keeps being misrepresented: I live in Singapore.”
Amid the tit-for-tat exchanges – loads of customers pushed again towards the US investor, stating his personal failings, others known as within the web site’s umpire, the AI chatbot Grok, to adjudicate the claims by Rabois. It got here down on the facet of Airwallex.
Grok stated: “Based on diverse sources including Airwallex’s disclosures, Wikipedia, and analyses of Chinese laws: Keith’s points on Airwallex’s Chinese investors (e.g., Tencent, HongShan), operations, and engineers in China are accurate. PRC laws can require data access for security. However, no evidence confirms routine data sharing with CCP or espionage. Privacy policy discloses global transfers, including to China. Probability: Structural risks exist (70-80% for vulnerabilities), but specific backdoor claims are unverified (20-30%).”
And in one other response as to whether his claims are true stated “Keith’s claims point to risks from Airwallex’s China ties, including investors like Tencent and HongShan, and operations there. The firm is HQ’d in Singapore, with a China payment license, and Chinese laws can require data cooperation for security. However, public sources show no confirmed evidence of unauthorized data sharing or espionage. Their privacy policy stresses protection and compliance. For specifics, review their policy or consult experts.”
Airwallex was based in Melbourne a decade in the past and counts Australian VCs Blackbird, Airtree and Sq. Peg amongst its buyers, final elevating $232 million at a c. $10 billion valuation in Could this 12 months.
Startup Every day contacted Airwallex for extra remark however did no obtain a response.
