Epic Games payment processor Xsolla allegedly hasn’t passed an IRS audit since 2017

Xsolla, a company that assists with processing microtransaction payments and other digital transactions for various video game companies, has been accused by a former executive of mishandling no less than $40 million.

According to KFI, one Emil Aliyev, who was hired as Xsolla’s vice president of global accounting this past April, claims that the company hasn’t passed a single IRS audit in the last six or so years, with $40 million missing between two account balances.

Aliyev alleges Xsolla disbursed this money to a private Goldman Sachs account; one apparently held by Xsolla’s founder and former CEO Alexander Agapitov, who stepped down from his position last year. Aliyev went on to share his findings with chief financial officer Leon Perry, saying it’s unlawful for the company to loan Agapitov money without charging a standard interest rate and that Xsolla had failed to report this to the IRS.

He was allegedly told, “It is not your problem,” despite being the vice president of global accounting. Sounds like it was very much his problem. Aliyev later met with Agapitov himself about the issues and was fired three days afterward “due to an alleged violation of company policy.” Aliyev maintains that he was never told precisely what policy he had supposedly violated.

All this comes courtesy of a lawsuit filed by Aliyev on Nov. 22 (thanks Kotaku) that claims he was “unlawfully terminated for reporting financial mishandling.” It also alleges that Aliyev complained to Xsolla management about his wrongful termination, but the company refused to investigate the matter. While you may not have heard of Xsolla, the company deals with many video game publishers as a payment platform for their microtransactions. Examples include Epic Games of Fortnite fame, Roblox, and Warner Bros. Games.

It’s too early to tell whether this lawsuit will prove fruitful or if its very existence will have an impact on Xsolla’s reputation and see it lose clients. Although it’s not the only controversy Xsolla’s facing. Just last month, Ukraine’s minister of digital transformation Mykhailo Fedorov called on the games industry to cut ties with Xsolla, accusing the company’s business in Russia of funding “the Russian military machine.”

Xsolla would downplay its Russian presence to Axios, saying it had relocated about 200 employees out of the country, but it still operates in Russia and thus pays the government taxes that, according to the company, “are going to whatever the government of that country decides to use them for.”