Crypto Debit Card Issuer Wirecard Missing Over $2 Billion in Cash as Auditor Raises Questions
Nicholas Otieno Jun 19, 2020 03:20
Wirecard announced that it is missing $2.1 billion after auditors Ernst & Young raised questions.
Shares of Wirecard, a German payment company, have fallen more than 60% after the company announced that its auditor, Ernst & Young (EY), raised questions over missing balances worth 1.9 billion euros (over $2 billion) of cash. The auditor said that it did not have adequate evidence for 1.9 billion euros of cash balances on Wirecard’s trust accounts. The missing funds amount to an estimate of a quarter of its total balance sheet.
Wirecard stated that there was evidence of “spurious” figures provided by a third party in order to deceive the auditor.
Wirecard joined Germany Blue Chip Stock Market Index two years ago. During that time, the company was valued at €24 billion. But following the latest plunge of its share price, the company’s value has declined just to €4 billion.
The future looking sore for the Fintech company
The company’s statement said that a trustee of Wirecard’s bank accounts tried to deceive the auditor and falsely indicated the existence of the cash.
Wirecard stated that the missing funds were supposed to be held in accounts in Asian banks and had been set aside for “risk management.” However, the auditor disclosed that the banks had been unable to provide the account numbers.
The scandal came after numerous articles published by the Financial Times in the previous year looking into alleged accounting irregularities in Wirecard’s Asian operations. The Financial Times earlier reported that Wirecard staff in Dublin and Dubai seem to have conspired to falsely inflate profits and sales for nearly a decade.
Wirecard is a major fintech company that issues crypto debit cards to various blockchain firms including Crypto.com, among others. The current problem facing Wirecard could put crypto card providers in jeopardy.
Although it is unlikely that crypto user funds are directly threatened, the mess in the Wirecard’s reserves could lead to service disruptions on crypto cards that the company issues. Currently, Wirecard is the debit card issuer for Crypto.com, CryptoPay, TenX, and Wirex.
Most providers are not willing to work with crypto firms. The crypto debit card industry, therefore, remains vulnerable to a few struggling principle issuers. In 2018 January, WaveCrest payment service provider collapsed and completely left all crypto debit card firms without a product, however, it remains unclear whether issues facing Wirecard would result in a similar scenario.
Binance launched new crypto debit card issued by VISA
In March 2020, Binance launched its new crypto debit card with the aim of providing crypto payment services anywhere around the globe. However, Binance is not the only cryptocurrency exchange that pursues this concept.
Last year, Coinbase unveiled a similar product, and many more exchanges are increasingly seeking to enter into the crypto debit card industry. With the number of crypto users skyrocketing, the number of blockchain-based debit cards is rising in the payment market.
