From: FinTech Global
FinTech Wirecard has filed for insolvency after a week of turmoil that saw it unable to account for a $2.1bn hole in its balance sheet and its former CEO being arrested on fraud allegations.
With Wirecard filing for insolvency, the company has become the first sitting business on Germany’s blue-chip share index to go bust, Reuters reported.
Before news hit the wire, Wirecard’s shares had already lost over 90% of its value after the auditor Ernst & Young (EY) refused to sign off on the company’s accounts for 2019 after it had found a $2.1bn hole in its finances. The missing money represented about of fourth of Wirecard’s balance sheet. The company later said that the money didn’t exist. The trade of Wirecard shares had also been suspended before the news of the insolvency filing came out.
Wirecard said that the insolvency was “due to impending insolvency and over-indebtedness” and that still considering if it should file for insolvency proceedings for its subsidiaries.
Following the news of the missing $2.1bn, CEO Markus Braun stepped down as CEO last Friday. He then turned himself in to the police on Monday. Munich prosecutors accused Braun of having inflated the digital payment company’s balance sheet and sales through fake transactions in order to make it more attractive to investors and customers. Prosecutors said that Braun may have acted in cooperation with other perpetrators. Braun was later released on Tuesday on a $5.7bn bail.
Copyright © 2018 RegTech Analyst
