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Wirecard files for insolvency but customer funds in WCS-issued crypto-enable cards won’t be affected

Sandal-hit Wirecard files for insolvency days after its CEO resigned.

Wirecard Headquarters / Wikimedia Commons

Fri, 26 Jun 2020, 07:15 am UTC

Wirecard AG, the crypto card issuer and international payments provider based in Munich, filed for insolvency on June 25, 2020. The move comes days after CEO Markus Braun’s resignation and the company’s admission that the missing €1.9 billion (around $2.1 billion) probably “does not exist.”

Markus Braun quit his post as the CEO of the scandal-hit Munich–based firm on June 19 but was arrested by the German police on June 23 on suspicion of market manipulation and falsifying accounts, according to Bitcoin.com. Braun was later released on a €5 million ($5.6 million) bail.

Under the leadership of its new interim CEO James Freis, Wirecard filed for insolvency at a Munich, Germany court. In a statement, the firm explained its decision as “due to impending insolvency and over-indebtedness.”

Wirecard has not yet decided if it will also file insolvency for Wirecard Card Solutions (WCS) and other subsidiaries. The firm is an issuer of cryptocurrency-enable cards such as Tenx’ visa debit card and Crypto.com’s Mco visa card. WCS also supplies card for the fintech firms Curve and Revolut.

Thankfully, Wirecard’s financial woes do not seem to have an impact on the funds of the users of its cryptocurrency-enable cards. The reason for this is that Wirecard Card Solutions is an entirely separate entity that is based on the U.K. and regulated by its financial authorities. Moreover, WCS’s accounts are separate from its parent firm.

Tenx and Crypto.com also assured their customers that their funds inside their cards won’t be affected by the discovery of the unaccounted $2.1 billion in Wirecard. “Debit cards issued by Wirecard for Crypto.com are fully prefunded,” Kris Marszalek, CEO of Crypto.com, explained.

“These client fiat funds are held by an EMI institution regulated by UK FCA in segregated client accounts. The funds are held at another bank (not Wirecard) as required by the FCA,” Marszalek he added. In a tweet, he also assured Crypto.com customers that “in case any of the services provided by Wirecard are disrupted, you will receive a fast 100% credit back to your crypto wallet.”

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