FlowBank, a Swiss online bank offering cryptocurrency trading services, has closed its doors

FlowBank, a Swiss online bank offering cryptocurrency trading services, was closed and declared bankrupt after the Swiss financial regulator found that it was “seriously violating” the standards required to operate as a bank.

“This measure became necessary because the bank no longer has the minimum capital required for its business operations,” the Federal Financial Market Supervisory Authority said in a statement published on June 13.

FINMA added that “there is no prospect of restructuring” and that there are “fears that the bank is overindebted”.

FINMA concluded that the bank “should be liquidated”, after finding in an investigation last week that it had “seriously failed” in its obligation to maintain sufficient capital.

source: Eve Jenner

Launched in 2020, FlowBank offers cryptocurrency trading services and was the banking partner of Techteryx, the stablecoin issuer behind TrueUSD (TUSD).

It was partly owned by crypto asset management company CoinShares and reportedly provided banking services to Binance, the world’s largest cryptocurrency exchange.

FINMA stressed that clients with funds of up to $111,710 (100,000 Swiss francs) will be protected first, which will aim to help clients recover this money “as quickly as possible”.

FlowBank has total assets of $760 million (CHF680 million), more than 22,000 client accounts and approximately 140 employees worldwide.

FlowBank was placed on the FINMA watchlist one year after its launch

The Swiss financial regulator first took enforcement action against FlowBank in October 2021, when it “identified serious violations of supervisory law”, particularly regarding capital requirements.

An independent auditor was appointed after 12 months to monitor FlowBank’s return to compliance.

about: 63 US banks on the verge of bankruptcy: why Bitcoin’s next target is $100,000

FINMA appointed another supervisor to monitor FlowBank’s financial activities and further investigate compliance lapses in June 2023, when other problems emerged.

This investigation notably revealed “several high-risk business relationships” and processed large transactions without due diligence, FINMA said.

FINMA ordered the withdrawal of the bank’s license on March 8, 2024. But the decision has not yet entered into legal force because it is awaiting appeal before the Federal Administrative Court.

review: Deposit Risks: What Do Cryptocurrency Exchanges Do With Your Money?

Leave a Reply

Your email address will not be published. Required fields are marked *