- Cryptocurrency debit card provider Wirecard has a $1.9 billion hole in its accounts
- Company saw share price decimated by 80%
- Crypto card holders unaffected
Cryptocurrency debit card provider Wirecard has made the startling announcement that it has a $1.9 billion hole in its accounts. The Munich-based company saw its share price crash 80% on the news that its auditors EY couldn’t find any trace of the sum in its accounts, with the auditors telling Wirecard that it suspected a third party had cooked the books in order to try and hide the loss.
Wirecard Sees Three Years of Growth Wiped Out
Wirecard has been one of the success stories of the German fintech sector in recent years, with its share price enjoying an almost incessant rise from 2010, reaching a market cap of €24 billion ($27 billion) in 2018. This unparalleled success has been halted in recent years however as question marks over the company’s accounting practices have been raised, with some questioning the use of ‘trust accounts’ to boost the company’s cash reserves.
These accusations have come back to haunt the company, with EY informing the company that there were strong indications that one of these trustees had attempted “to deceive the auditor” and might have provided “spurious cash balances”. Wirecard has since stated that it has “become the aggrieved party in a case of fraud of considerable proportions”, suggesting that an inside job is the most likely explanation.
As a result of the revelation, Wirecard’s COO has been suspended until June 30 while the company tries to resolve the mess, which saw the share price drop from $103 to $29 within hours.
Cryptocurrency Debit Card Holders Unaffected
Wirecard Card Solutions, a wholly-owned subsidiary of Wirecard, issues Visa debit cards for Wirex, TenX, CryptoPay, and Crypto.com, but there is no suggestion that card owners are in any danger. Wirecard has nothing to do with the operation of the cryptocurrency debit cards or the holdings on them, meaning that holders can continue to use them as normal:
Facts: debit cards issued by Wirecard for https://t.co/pFc4PzqqHR are fully prefunded. These client fiat funds are held by an EMI institution regulated by UK FCA in segregated client accounts. The funds are held at another bank (not Wirecard) as required by the FCA. (1/2)
— Kris | Crypto.com (@Kris_HK) June 18, 2020
Cryptocurrency debit card holders haven’t had an easy ride in recent years, particularly after Wavecrest lost its license to issue cards in 2018 which put almost all blockchain debit card operations out of action in a trice. Users will therefore hope that Wirecard can come through this intact and they won’t face more disruption.