Airwallex faces a growing CFIUS probe risk after the Pentagon added Tencent to its list of Chinese military companies, tightening scrutiny on the payments firm that counts the tech giant among its investors.
Senator Tom Cotton (R-Ark.) wrote to Treasury Secretary Scott Bessent in June, calling for the Committee on Foreign Investment in the United States to investigate Airwallex and potentially force a divestment by its Chinese investors.
Cotton’s letter cited that about 40% of Airwallex employees work in China, all of whom are legally required to covertly assist Chinese intelligence services under China’s 2017 National Intelligence Law, according to VitalLaw.
Tencent added to Pentagon military companies list
The Defence Department has since added Tencent to its 1260H List of Chinese military companies, according to Export Compliance Daily, sharpening the Airwallex CFIUS probe risk beyond the senator’s initial letter.
Cotton alleged that Tencent and HongShan, formerly Sequoia China, hold a reported 20% combined stake in Airwallex. The firm’s chief executive Jack Zhang has called the allegations “false,” stating that US customer data is stored domestically and cannot be accessed by China-based staff.
Zhang also clarified that Tencent holds a passive stake of less than 10% and does not hold a board seat. Airwallex has invited third-party firms to audit its privacy and data controls.
President Lucy Liu declined to address Cotton’s letter directly, deferring to a prior company statement. She framed the broader regulatory environment as an opportunity. “There’s a new category being created for global businesses like ours, which is good, because you can imagine trying to fit us into a box where we don’t really belong,” she said.
Airwallex CFIUS probe risk sits alongside fresh $11bn valuation
The regulatory pressure comes as Airwallex is riding a wave of investor confidence. The Melbourne-founded company raised $320 million in a Series H round in late June, valuing it at $11 billion, up from $8 billion in December when it raised $330 million in a previous round, both led by Addition.
Liu told Fortune the latest round followed “ongoing conversations” with existing investors. “We have a lot ahead of us, and we just want to be able to have enough capital to fast-charge our plans,” she said.
The platform now serves over 675,000 businesses and has passed $1 billion in annualised run rate revenue. Liu said the company is “EBITDA positive” with a “healthy gross margin,” but declined to give specific profitability figures.
New products include T:0, an automated bookkeeping system, and Ari, an agentic consumer wallet built for one-click checkout. Airwallex is also pushing into the US, South Korea, Mexico and Brazil, having acquired a Mexican payments licence through its purchase of MexPago.
IPO on hold as scrutiny mounts
Liu confirmed Airwallex is targeting being “IPO-ready” by the end of this year, but said a firm date depends on market conditions. “It’s just not the best time, given how complicated things are,” she said.
Airwallex is not alone in holding back. Dublin-based Stripe, founded in 2010, has also not gone public. “Larger companies are still able to raise money without going public,” Liu noted.
Regulatory headaches extend beyond the US. In January, Australia’s financial watchdog AUSTRAC ordered Airwallex to bring in an external auditor to check compliance with anti-money-laundering and counter-terrorism obligations, saying it suspected “serious noncompliance.” Liu said the company is “cooperating fully” and described the probe as industry-wide rather than company-specific.
Airwallex last year designated Singapore and San Francisco as its global co-headquarters, moving away from its Australian base. The company’s next regulatory milestone will be AUSTRAC’s audit conclusion and any formal response from the Treasury to Cotton’s CFIUS referral.
