In the wake of a $2.1 billion accounting scandal, Wirecard, whose business lines include issuing cryptocurrency payments cards for TenX and Crypto.com, has collapsed into insolvency.
In a statement Thursday, the Munich-based card issuer said it had no choice other than to begin insolvency proceedings as it faced “impending insolvency and over-indebtedness.”
“The Management Board has come to the conclusion that a positive going concern forecast cannot be made in the short time available. Thus, the company’s ability to continue as a going concern is not assured,” Wirecard said.
Wirecard’s share price tanked nearly 80% on the news.
This comes just over a week after Wirecard, a former German blue-chip, admitted that over a quarter of its balance sheet, around $2.1 billion, could not be accounted for. In a bombshell statement, the company said employees may have inflated revenue in an attempt to mislead auditors.
On Monday, CEO Markus Braun was arrested on suspicion of accounting fraud and market manipulation.
Wirecard has long been the primary card issuer for TenX and Crypto.com. A TenX spokesperson told CoinDesk this week that customer funds, both crypto, and fiat, had not been affected by the Wirecard scandal.
“We are however monitoring the situation closely and are always evaluating the best options for our customers,” the spokesperson said.
Crypto.com has steadfastly refused to comment. “We’re still staying totally silent on this,” its spokesperson told CoinDesk.
The only public utterance has been CEO Kris Marszalek on Twitter saying user funds have not been affected by the Wirecard scandal, as they’re held by a separate institution. “Wirecard does not have custody of any crypto held by Crypto.com,” he said.
Neither TenX nor Crypto.com responded immediately to requests for comment after the insolvency filing Thursday.
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.