The former chief executive officer of Wirecard, a German fintech company, has been detained by Munich police after being charged with misrepresenting the company’s balances.
As reported by Reuters and many others, Markus Braun, who led the company for the better part of two decades, has been arrested by police in Munich, Germany. According to a statement issued by the prosecutor’s office, he is accused of having conspired to inflate assets and total revenue through false transactions with “third-party acquirers.” This was done to make the company appear more attractive to investors, the prosecutors say.
The misrepresented funds in question, amounting to 1.9 billion euros, or $2.1 billion, are supposed to be held in a trust account in two unspecified banks in the Philippines. Between June 21 and 22, Wirecard board of directors issued a statement saying that “with a high degree of probability” the funds do not exist.
The money represents more than 32% of Wirecard’s claimed assets of 5.8 billion euros ($6.5 billion). Since the issue finally came to light last week, Braun resigned from his role.
A judge is set to deliberate whether to continue detention today.
Company in dire straits
The hole in the budget and the ongoing turmoil raises questions on whether the company will be able to recover and survive in the long-term. As Cryptox mentioned previously, Wirecard is the principal issuer for many crypto debit card companies, like Crypto.com and Wirex’s Asia-Pacific offering.
The CEO of Crypto.com, Kris Marszalek, noted that its debit cards are fully pre-funded, and the reserves are held in a separate U.K. bank distinct from Wirecard.
Meanwhile, Wirecard’s stock price has fallen about 84% to $16 as the news became known.
The longer term fate of the company remains unknown, but Wirecard-issued cards continue operating normally so far.
