Wirecard's missing $2 billion

SnowTiger

Some prepaid cards are issued by Wirecard.  Examples: Dozens, boon, Kroo and Glint to name a few. 

https://www.nytimes.com/2020/06/19/business/wirecard-scandal.html: 

Wirecard, a Germany company that soared in value in recent years as it provided a widening array of payment services around the world, was suddenly collapsing on Friday amid questions surrounding missing cash balances amounting to 1.9 billion euros, about $2.1 billion.

[...]

Wirecard, which has denied any wrongdoing, responded to the reports by delaying EY’s [the company’s auditor] annual report for 2019 and hiring KPMG to provide an independent assessment of the company’s books.

[...]

EY said it would not be able to issue the report because it could not confirm the existence of €1.9 billion in cash balances on trust accounts, representing around a quarter of its balance sheet.

Client's money is supposed to be deposited in segregated trust accounts, which means it should be safe if the company goes bust.  However, Wirecard's auditor appears to be unable to confirm the balances of these accounts.

Wirecard has several subsidiaries.  Cards issued in the UK are issued by Wirecard UK and Ireland, which is based in Dublin, Ireland.

jonesMUFCforever

There is another thread on here about Thomas Cook prepaid cards (Run by Wirecard) - if you have one of these take the offer NOW to get your money back.
If you leave it you might find yourself at the back of a very long creditor queue.

colsten

Another Bernie Madoff?

London7766551

Oh dear people better spend the money on these cards while they can!

jonesMUFCforever

London7766551 said:

Oh dear people better spend the money on these cards while they can!

They can't! They were supposed to clear the money off the cards before end of April.

London7766551

https://www.bbc.com/news/business-53132953

Scandal-hit payments firm Wirecard has said the €1.9bn (£1.7bn) missing from its accounts simply may not exist.
Wirecard's chief executive quit on Friday as the search for the missing cash hit a dead end in the Philippines.
On Sunday the central bank of Philippines said none of the money appears to have entered the country's financial system.
The German company also said it was withdrawing its financial results for 2019 and the first quarter of 2020.
"The Management Board of Wirecard assesses on the basis of further examination that there is a prevailing likelihood that the bank trust account balances in the amount of 1.9 billion EUR do not exist," the company said in a statement on Monday.
The missing money accounts for around a quarter of its total balance sheet.

Is this going to happen with other similar type of companies I wonder? Germany you would think had strict regulations I would have thought would prevent something like this. Clearly not! 

[Deleted User]

Guess it highlights to keep balances to a minimum on these e-money institution backed cards   

Uxb1

Filed for insolvency today

SnowTiger

Uxb1 said:

Filed for insolvency today

Yep.

https://www.bbc.co.uk/news/business-53176003: 

Scandal-hit payments firm Wirecard has filed for insolvency, causing its shares to dive almost 80%.

It comes after the German firm last week disclosed a €1.9bn (£1.7bn) hole in its accounts.

Former boss Markus Braun has since been arrested and accused of inflating Wirecard's finances to make them appear healthier to investors and customers.

The firm's creditors stand to lose billions of euros from the scandal.

I think anyone who has money on a Wirecard issued card should spend or withdraw it as quickly as possible. I emptied the accounts I have a few days ago.

badger09

SnowTiger said:

Uxb1 said:

Filed for insolvency today

Yep.

https://www.bbc.co.uk/news/business-53176003: 

Scandal-hit payments firm Wirecard has filed for insolvency, causing its shares to dive almost 80%.

It comes after the German firm last week disclosed a €1.9bn (£1.7bn) hole in its accounts.

Former boss Markus Braun has since been arrested and accused of inflating Wirecard's finances to make them appear healthier to investors and customers.

The firm's creditors stand to lose billions of euros from the scandal.

I think anyone who has money on a Wirecard issued card should spend or withdraw it as quickly as possible. I emptied the accounts I have a few days ago.

You probably tipped them over the edge

jonnygee2

Client's money is supposed to be deposited in segregated trust accounts, which means it should be safe if the company goes bust.  However, Wirecard's auditor appears to be unable to confirm the balances of these accounts.

I think you have misunderstood the article. The missing money is from the businesses balance sheets - they have been declaring profits that didn't actually exist, causing an overvaluation. They are not, as far as can be told from this article, from customer deposits which are not part of a banks operational profit.