A Renowned Payment Platform Misplaces More Than £1.6 Billion!
June 30th, 2020 1.00pm
Some regard cryptocurrencies as nothing more than another way to hide illicit activities. And though the sector has seen lots of frauds and other suspicious schemes over the last couple of years, its scale is nothing to worry about.
Take payment platforms for example, as they too have a history of glitches and bugs. But, none of them had made such a blunder like Wirecard, a payment processor originating from Germany.
How Can You Lose So Much Money?
The platform, very popular within the gambling industry, has recently filed for bankruptcy, after misplacing more than £1.6 billion!
Founded back in 1999, Wirecard has quickly established itself as a reliable and trustworthy payment platform, attracting a large number of high-profile clients and partners from all around the globe. That’s why the financial world was in shock after an inquiry revealed that a staggering sum of £1.65 billion was simply missing from the company’s balance sheet.
This piece of information was made public after the inquiry led by The Finacial Times, which started in 2019, had finally been completed. The surprising discovery may have been a shock for the platform’s clients, but for the German financial watchdog BaFin, it represented a major embarrassment.
The finger was pointing at Markus Braun, Chief Executive Officer at Wirecard, who was soon taken into custody. According to available information, he is likely to be charged with manipulating financial data on the company’s balance sheet. He had been at the helm of the German platform since the early 2000s and was responsible for its business success. Braun is said to have played the crucial role in earning Wirecard a spot on the DAX 30 index on the Frankfurt Stock Exchange. It now seems the financial giant was nothing more than a giant hoax.
The Sum Could Be Even Bigger
As soon as the information was revealed, Wirecard tried to provide an explanation by saying the missing funds weren’t actually lost, but only held in two banks in the Philippines. Both banks mentioned by Wirecard have denied being in any connection with the financial service. It was later revealed that the alleged evidence of connections Wirecard had with these banks was falsified, creating even more problems for the company. Its former Chief Operating Officer, Jan Marsalek, will now have to face the authorities and explain the whole thing. Marsalek, who was fired last week, has already arrived in the Philippines.
Investors turned out to be the biggest losers, as they didn’t have the time to move their funds, and in the end, lost millions of pounds. At the same time, Wirecard’s stock plummetted to the ground, from around £90 last week to just £1.6. But it appears we’re about to get even worse news since the misplaced £1.65 billion could be just a portion of the sum that Wirecard owes. The information provided by Reuters state the debt could go up to £3.2 billion!
Many questions need to be answered right now, while the most important one is how Wirecard was able to fool the system for so long. The scandal could lead to major changes in the way BaFin operated, as the regulator is held accountable for the mess.
Speaking about the scandal that has shaken the financial world, German Finance Minister Olaf Scholz said it was evident that the sector needed major changes. He explained that the current supervisory structures would have to be reviewed, as it was clear they hadn’t been doing their job.
“This is a wake-up call”, Schulz stated and pointed out the government planned to introduce new measures to prevent another Wirecard from happening in the future.
Unfortunately, the sum Wired misplaced could be even bigger