German payment processor Wirecard which issues debit cards of Crypto.com has its share plunging more than 60% after the company said on Thursday that its auditor Ernst & Young can’t find evidence for €1.9 billion euros (US$2.1 billion) in cash on its balance sheet. Markus Braun, Wirecard chief executive, in a statement said,
“Previously issued confirmations by the banks were no longer recognized by the auditor. All parties involved are endeavoring to clarify the matter as quickly as possible.”
“It is currently unclear whether fraudulent transactions to the detriment of Wirecard AG have occurred.”
This is, however, just the latest twist as back in October, Wirecard staff reportedly conspired to fraudulently inflate sales and profits at subsidiaries. The company denied the charges and after a special investigation, KPMG said it couldn't prove the revenue of its third-party acquiring business. Barry Norris, manager of the Argonaut Absolute Return Fund said,
“During our first-quarter conference call we previously described the company as ‘having more red flags than you would see at a communist rally.’”
Germany’s stock market regulator is separately investigating the company CEO who held 7% of the stock making him the largest shareholder, over insider trading allegations.
Wirecard Card Solution, the wholly owned subsidiary of Wirecard issues the MCO Visa Card of Crypto.com and Visa Debit Card of TenX.
After the news broke out, Kris Marszalek, chief executive of Crypto.com clarified that the debit cards issued by the company are “fully prefunded” and Wirecard doesn’t have custody of any cryptos held by Crypto.com. Marszalek said,
“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.”