Paysafe Limited

This securities fraud class action arises out of Defendants’ dissemination of materially false or misleading statements regarding the effect of new online gambling regulations in Germany on Paysafe’s revenues during the lead up to Paysafe’s De-SPAC merger agreement with SPAC Foley Trasimene Acquisition Corp. II (“FTAC”), and beyond.

On May 16, 2024, Lead Plaintiffs filed a 72-page complaint (“Complaint”) on behalf of a putative class of investors who purchased Paysafe and/or FTAC common stock between December 7, 2020 and November 11, 2021 (the “Class Period”), alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.

Paysafe is a Bermuda-based company that operates a payment processing network for both individuals and businesses. Unlike some of their main competitors, Paysafe’s payment processing network is also available for use with online gambling. One of the world’s largest online payment processors, Paysafe boasts “1,000 operators” in regions outside of the U.S. and Canada, including the Company’s largest European market, Germany. Paysafe’s revenues in the region were particularly fueled by “high roller” users spending large, per month amounts on online gambling services.

In March 2020, German lawmakers had finalized updates to the country’s online gambling laws that would take force in July 2021. Of crucial importance to Paysafe, German legislators limited gamblers’ spending to €1,000 per month across all gambling websites.

On December 7, 2020, Paysafe and FTAC announced a merger agreement that would allow Paysafe to go public without undertaking a formal IPO process.  Rather than alert prospective investors to the fact the €1,000 per month limit would hurt the Company’s revenues in its all-important German market, the Defendants proclaimed the forthcoming regulations as a positive development, that showed that Germany was not seeking an outright prohibition on online gambling practices. Based on the Defendants’ misleading statements and omissions about Paysafe’s expected revenue as a result of Germany’s new regulations, FTAC’s shareholders voted in favor of the merger on March 25, 2021.  The Defendants continued to disseminate false and misleading statements about Paysafe’s revenues in the months after the merger was closed on March 30, 2021.

As alleged in the Complaint, as a result of the new German regulations, on August 16, 2021, Paysafe reported to investors that it was lowering its revenue guidance for the third quarter, which began on July 1, 2021—the same day the new German regulations took effect. The new guidance lowered expected revenue for the third quarter between $14 and $29 million below market consensus. Still, the Defendants claimed this was due to “softness” in the European market, rather than the effect of the new German regulations. It was not until the Company announced the results for the third quarter on November 11, 2021 that the Defendants admitted to investors what it knew all along, which was that the new gambling regulations were going to have a materially negative impact on the Company’s revenues. In a twitter post that day, Defendant Dawood admitted that Paysafe had in fact been anticipating the negative effect that the amended German regulations would have on the Paysafe. In spite of this knowledge, throughout the Class Period, Defendants continued to make and disseminate false and misleading statements, downplaying and ignoring the effects of the new regulations, to ensure that the merger of the two companies was consummated and the stock of the Company remained inflated thereafter. Through the Complaint, Lead Plaintiffs seek to recover damages suffered by investors in FTAC and Paysafe during the Class Period.

Defendants are scheduled to respond to the Complaint on or before July 15, 2024.