Crypto Cards Affected as UK Regulator Suspends Wirecard Subsidiary
Wirecard’s subsidiary responsible for issuing debit cards, Wirecard Card Solutions Ltd., has been suspended by the United Kingdom’s Financial Conduct Authority, or FCA.
According to a statement issued on June 26 by the regulator, Wirecard’s subsidiary is required to not dispose of any of its funds, stop conducting any of its regulated activity, and it must communicate on its website and to its customers that it is no longer permitted to conduct regulated activity.
As of press time, however, such statements are not present on any of Wirecard’s websites, including the subsidiary’s dedicated domain.
The FCA explained that following the news of the 1.9 billion euros shortfall in Wirecard, it began working with the card issuing subsidiary to ensure that customer funds are protected. On Friday, the regulator took “additional measures” and forced the firm to stop all regulated activities. “This now means customers money cannot be accessed,” the statement concludes.
That suggests that customers may be barred from using any of the debit cards issued by the company. That includes crypto debit cards from Crypto.com, TenX and others.
The CEO of Crypto.com, Kris Marszalek, reassured his customers that funds are secure and are owned by the company. Speaking with Cointelegraph, Marszalek added:
“As of this moment the cards are working fine. As per our statement yesterday, in case of a disruption, we will rapidly proceed to credit the funds back to our users crypto wallets. Given the announcement made by the FCA today, this is highly likely.”
He added that the company is looking for alternative solutions to ensure customers can continue using their cards.
In a subsequent update by Crypto.com, the company said that it was asked to cease operations for its EU and U.K. cards, which means that customers will not be able to use them “later today.” The company promised that within 48 hours, all funds on the debit cards will be returned to customers on their crypto wallets.
Cointelegraph reached out to TenX as well, but did not receive an immediate response.
Developing scandal
Wirecard’s woes began when the company admitted to lacking over 32% of its claimed assets, worth $2.1 billion.
The CEO, Markus Braun, resigned and was subsequently arrested by German authorities. Prosecutors believe that the company’s management was involved in a long-running fraud to misrepresent the company’s earnings and assets.
On Thursday, the company filed for insolvency due to the sudden shortfall, which can be the first step to bankruptcy. The disruption to its business at the hands of the FCA is likely to worsen its already tenuous financial situation.
Update, 10:50 UTC: Crypto.com confirmed that its cards will be rendered unusable soon.