In brief
- Former Wirecard CEO Dr. Markus Braun turned himself in to police on Monday evening.
- He is accused of lying to auditors about a €1.9 billion ($2.1 billion) hole in its finances.
- Shares in Wirecard have dropped 85% in under a week.
German authorities have arrested the former CEO of German digital payments company Wirecard—which operates crypto debit cards—on suspicion of market manipulation and false accounting, according to the Financial Times.
Dr. Markus Braun is accused of lying to auditors about a €1.9 billion ($2.1 billion) hole in its finances. Wirecard said yesterday that the money probably does “not exist” and said that it had misled investors about how it made its profits.
The axe came swiftly for Dr. Markus Braun, the CEO of German fintech company Wirecard, which yesterday announced that auditor Ernst & Young had discovered a $2 billion hole on its balance sheet.
Today, Wirecard announced that Braun has resigned with immediate effect “in mutual consent” with the board. Dr. James H. Freis, Jr, who joined Wirecard’s board yesterday ahead of a previously-announced July 1 appointment, will fill the void as interim CEO. Additionally, Wirecard has suspended board membe...
Dr. Braun, who left the company on Friday, turned himself in on Monday evening, reported the FT. A judge in Munich will decide later today whether Dr. Braun must remain in custody.
Shares in Wirecard have dropped from €104 ($117) on June 17 to €16 ($18) today, down 85%.
Wirecard oversees major crypto debit cards
Wirecard operates crypto debit cards of Crypto.com and TenX. But both companies have said that user funds are not at risk.
Crypto.com CEO Kris Marzalek said, in a tweet on June 18, that the money of these cards are not held with Wirecard. “Wirecard does not have custody of any crypto held by Crypto.com,” he wrote, adding that the funds are held at another bank and regulated by the UK’s financial conduct authority.
TenX said much the same. In a tweet on June 19, it wrote: “As of now, this issue has no impact on our operation. Also, customer’s crypto and fiat balances are maintained by TenX and not by Wirecard.”
German fintech company Wirecard is in a $2 billion dollar hole.
Its auditor, Ernst & Young, has informed the company that one of the trustees for its many bank accounts reported a “spurious balance” to mislead the auditor regarding the company’s true cash balances, according to a press release.
Ernst & Young’s Munich arm could find “no sufficient audit evidence … of cash balances on trust accounts … in the amount of EUR 1.9 billion” ( or USD $2 billion), the press release stated.
A trustee of...
“We are [a] company completely functioning on our own, and also our licences.
Wirecard is our partner for issuing our cards. As of now, we don't expect any issues in that regard,” it added.
But it does show potential weaknesses with crypto companies relying on traditional banking rails. If only there was some alternative technology they could use.
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