Yahoo Finance Crypto Card Issuer Wirecard Says It’s Missing $2.1B in ‘German Enron’ Scandal
Former German blue-chip Wirecard has said a quarter of its total balance sheet is missing after “spurious cash balances” were provided to its auditor, EY.
In an explosive statement Thursday, the Munich-based card issuer, said a total of €1.9 billion ($2.1 billion) could not be accounted for and that some members of the company had purposefully filed false or misleading statements “in order to deceive the auditor and create a wrong perception of the existence of such cash balances.”
Wirecard admitted the accounting hole was roughly a quarter of the company’s total balance sheet.
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A former poster child of the German tech scene, Wirecard has been heavily scrutinized over supposed irregularities in its accounting practices. The company was accused last year of fraudulently inflating sales and profit figures, and that it was using client funds held in escrow accounts to boost cash balances.
Wirecard’s share price has tanked. At press time, shares traded at the €36 (~$40) mark, down 70% since Wednesday. The credit card issuer had once been one of Germany’s most prestigious companies, even surpassing Commerzbank with a €24.6 billion( ~$27.6 billion) market valuation in September 2018.
Lionel Barber, former editor-in-chief of the Financial Times, said on Twitter that Wirecard was turning into a German version of the Enron scandal.
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Wirecard subsidiary Wirecard Card Solutions branched out into crypto when it became the issuer for crypto payment card providers Crypto.com and TenX. Wirecard had also partnered with TON Labs, the developer house behind Telegram’s blockchain. A court document also claimed Wirecard’s COO participated in the $1.7 billion token sale in 2018.
It’s unclear if Crypto.com, which only rolled out is payment card in Europe last month, is planning on switching its card issuer. CoinDesk reached out for comment but hadn’t heard back by press time.
Wirecard had already delayed the release of its audited financial statements and Thursday was supposed to be the final publication date. Today’s news has now pushed this back indefinitely. The delay means creditors will be able to pull up to €2 billion (~$2.2 billion) worth of loans as of Friday.
Wirecard’s board is now working “intensively” with EY “towards a clarification of the situation.”
