Wirecard-The Major Crypto Debit Card Issuer Reportedly Missing $2.1B in Cash
June 18, 2020 6:06 pm
A German major fintech company, Wirecard which is responsible for issuing several crypto debit cards, including Crypto.com’s, has fallen into controversy as some of its employees appear to have defrauded the company, by allegedly misrepresented over $2 billion in cash reserves.
On June 18, the Financial Times reported, auditors from Big Four accounting company Ernst & Young (EY) “could not confirm the existence of €1.9bn in cash,” or approximately $2.1 billion.
As stated by the company, a trustee of Wirecard’s bank accounts attempted to mislead the auditor and falsely show the existence of the cash balance. The company’s stock price plunged by almost 50% on Thursday after the issue became public. According to an earlier report by the Financial Times, Wirecard staff in Dubai and Dublin seem to have conspired to falsely increase sales and profits for almost a decade.
Crypto Cards Issued By Wirecard
Crypto.com’s popular debit cards are issued by Wirecard, which could prove to be an obstacle for the company. While it is strange that user funds are directly endangered, the hole in the reserves could result in service disruptions on cards issued by Wirecard. Although, Crypto.com is not the only provider that could be affected by this. Wirecard is currently the debit card issuer for Wirex, TenX and CryptoPay.
A notable exception in this group is Coinbase Card, which is currently issued by PaySafe Financial Services. Moreover, Coinbase became a principal Visa issuer in February 2020, which would put it at the same level of Wirecard and PaySafe. However, the company has not yet directly issued its own debit card. Few providers are willing to work with cryptocurrency companies, and the crypto debit card industry largely remains vulnerable to struggling principal issuers.
In January 2018, the sudden collapse of WaveCrest left virtually all crypto debit card companies without a product. It is unclear whether WireCard’s issues will result in a comparable phenomenon, though this is different from the WaveCrest instance, which simply had its Visa license revoked.