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 it could not account for over a quarter of its balance sheet, around $2.1 billion. In a bombshell statement, the company said some 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.
CEO Kris Marszalek said on Twitter last week that user funds have not been affected by the Wirecard scandal because they’re held by a separate institution. “Wirecard does not have custody of any crypto held by Crypto.com,” he said.
In a statement Thursday, he said Crypto.com would keep users updated as the situation develops and reiterated that user funds were safe
Neither TenX nor Crypto.com responded immediately to requests for comment after the insolvency filing Thursday.
UPDATE (June 25, 12:33 UTC): This article has been updated with a statement from Marszalek that was published on Thursday.