This week’s collapse of payment processor Wirecard and the company’s subsequent filing for insolvency in connection with accounting fraud of $2.1 billion had ramifications for so-called crypto-card issuers such as Crypto.com and TenX. As a result, both companies – who provide the flexibility to use crypto as a means of payment through Visa cards – were compelled to react quickly to reassure users that their funds were safe.
Wirecard AG filed for insolvency in Germany today.
To all our card customers: your fiat funds are safe and guaranteed by https://t.co/pFc4PzqqHR — in case any of the services provided by Wirecard are disrupted, you will receive a fast 100% credit back to your crypto wallet.
— Kris | Crypto.com (@Kris_HK) June 25, 2020
TenX would like to make clear that all of our customer’s crypto and fiat balances are maintained by TenX and not Wirecard. We will keep you up to date on any important information and changes. As of now, this issue has no impact on our operation.
— TenX (@tenxwallet) June 26, 2020
Crypto.com originally issued a statement confirming they are “…working on transferring the card program to a new provider, so that we can resume the issuing of cards in the UK and Europe and allow existing the new customers to benefit from our card program again.”
A few hours later they advised that “For all Europe/UK MCO Visa Cards, all credits have been processed successfully to cardholders’ crypto wallets equivalent to the fiat balances held on the cards.”
In a similar vein, TenX told their customers that they “…will no longer be able to use their cards or purchase bitcoin using credit/debit cards through the app…[but they]…can continue to store, send and receive cryptocurrency at any time with no interruption.”
Perhaps unintentionally, TenX have articulated on not only the current Wirecard situation but the wider financial industry as it transits towards a more digital framework supporting a tokenised economy.
For while the crypto-card providers who hold the junction between fiat and cryptocurrency appear to have contained the present issue and secured their customers funds, other entities connected to the Wirecard debacle are on less secure footing.
According to the Financial Times, BaFin, the German regulator who backed Wirecard despite growing evidence of fraud, could be investigated by the European Union for “breach of union law.”
The accounting firm who have audited Wirecard’s business for years, Ernst & Young, are facing a potential backlash for overseeing the first member of Germany’s prestigious DAX stock index to go bust.
Full facts of the case are still being established yet comparisons are already being drawn with the Enron bankruptcy from twenty years ago which engulfed their company auditors, Arthur Anderson.
Twenty years ago, I watched the #Enron scandal spell the end for the world’s leading accounting firm #ArthurAnderson. I never thought I would see a similar failure again. I was wrong. #Wirecard
— Christopher Storck (@KommStrategie) June 26, 2020
Ernst & Young are considered to be one of the world’s remaining big 4 accountancy firms. They audit accounts for some of the biggest names in the corporate world including Alphabet Inc., Amazon, Apple, Facebook, Lockheed Martin, 21st Century Fox, the Carlyle Group, and Intel.