Founders with activities in Ukraine using US neobank Mercury have been informed that their accounts will be closed after the Silicon Valley-based company decided to not serve customers with “frequent account activity” in the war-torn country, Sifted has learnt.
San Francisco-based Mercury, which is used by many Ukrainian startups for everyday banking and payroll, will no longer support accounts for business “with associated addresses and/or frequent account activity” in Ukraine, it told customers. The move puts Ukrainian businesses in the same category as those that face international financial sanctions, such as Russia, Iran and Belarus.
The email from Mercury, sent to one Ukrainian startup on July 22 and seen by Sifted, says the companies’ accounts will be closed as of August 13 — before then, founders are asked to transfer all their funds to another account, settle all incoming and outgoing transactions and download all relevant account statements.
“Please note that this decision was not made lightly. We apologise for the disruption this may cause to your business,” Mercury’s email reads.
But many Ukrainian founders are furious — for the chaos it’s caused at their businesses and for the reasoning given by the Andreessen Horowitz and Coatue-backed fintech.
“This is a horrible look for Mercury, equating the oppressors with the oppressed,” says Borys Musielak, a Polish investor who backs Ukrainian startups scaling to the US.
Mercury told Sifted in a statement that the change of their policy on Ukraine "applies to founders living in Ukraine, not founders living in the US with a Ukrainian passport". “We will continue to revisit this policy and hope that we can change this in the future,” the company said.
No salaries, no accounts
Kyryo Mazur, cofounder of Happy Monday, a career platform, started to use Mercury a year and a half ago after his startup received a grant, in US dollars, from Google for Startups. It looked “like a progressive innovative solution,” he tells Sifted. His startup is registered in Delaware, but he and his cofounder are based in the EU — and have team members in Ukraine.
Ukrainian founders often decide to incorporate their companies in Delaware, like Mazur — it gives them the ability to scale up in the world’s largest market, and more easily attract American investors and clients. But since the full-scale Russian invasion of Ukraine started, it’s become harder for many of them to physically move to the US; and those that do often rely on teams back at home. After Silicon Valley Bank collapsed in 2022, Mercury became a popular banking choice for many of them; it allowed them to open business accounts remotely and make payments to Ukraine.
Two weeks ago, Mazur tried to make the usual payments to his employees in Ukraine and Poland — but the service was unavailable. “Later we understood that payments don’t work for receivers with Ukrainian passports — no matter their country, residency or physical location. We have friends who have lived in Germany for decades, but still have Ukrainian passports; they were also pushed to close accounts,” he says.
“Our payments stopped for almost a week,” he adds. “We had a backup account with Wise Business and we quickly moved money there so our team received all payments in time. But this is a very disturbing call for our business operations and financial stability. We are still a startup and money transfering is something that should be reliable and stable for us.”
Alyona Mysko, the founder of Fuelfinance, a Delaware-incorporated fintech, decided to set up an account with Mercury over three years ago. Mysko splits her time between the US and Ukraine — and has employees in Ukraine.
“Mercury was the one bank that allowed us to open an account remotely,” she says. “That’s the main reason why so many Ukrainian founders decided to open their bank accounts there. It was a huge support for all the Ukrainian founders, especially the men, who after the start of the full-scale war couldn't leave the country.”
After the SVB drama put treasury management at the top of every founder’s mind, she opened a new account at Chase Bank — but it doesn’t allow her to transfer money to Ukraine — or pay her Ukrainian employees.
“There’s a significant issue in the whole banking system in the US — it just started from Mercury but I see that many other banks have problems with making transfers to Ukrainian employees, even though we have all the legal documents,” she adds.
Anastasiia Smyk, cofounder at Input Soft, a platform for the aviation sector, who praised Mercury for its previous support for the Ukrainian founders, says “the abrupt, unexplained closure of our account on August 13, without appeal, is utterly shocking and unacceptable.”
“This decision has caused severe disruption to our business operations, forcing us to urgently find a new banking partner, transfer funds and navigate complex financial processes. The lack of transparency and empathy in the communication surrounding the closure of Ukrainian-owned accounts is deeply disappointing,” she says. “To be categorised alongside terrorist states is deeply offensive and damaging to our reputation.”
Rigorous standards
Mercury told Sifted that while Ukraine as a whole is not sanctioned, several regions of the country are. “We previously applied a region-based model to support as many customers in Ukraine as possible; however supporting this policy while also upholding our rigorous standards on compliance has become increasingly complex,” the bank said in a statement.
“They don't know if Ukraine is still a country or part of Russia, which is under international sanctions,” says Musielak. “If that is indeed the reason, I'll be happy to provide the most recent maps of the region.”
“I feel these actions are actions against Ukraine,” adds Mysko. “IT companies and startups are now one of the biggest parts of the economy, they actually pay taxes in Ukraine and this policy of Mercury against Ukrainians is just slowing down our Ukrainian economy.”
“I understand the requirements and efforts of compliance, but this decision has influenced hundreds of businesses and made their life harder,” says Mazur. “Making startups is hard. Making startups of Ukrainian origin is much more challenging. And Mercury just made everything worse. I hope they will change this decision, at least partly.”
