<p><!-- BEGIN THEIA POST SLIDER --></p>
<p><span class="dropcap">The</span> famous German payment company <a href="https://g.co/kgs/r5ur4Q" target="_blank" rel="noopener noreferrer">Wirecard</a> is declared bankrupt following a financial and accounting scandal reporting a hole of 2.13 billion dollars in the accounts of the said company. It causes a new collapse in the financial system.</p>
<p>This fact prompted the financial services of the European Commission to launch an investigation to find out whether the German regulator <a href="https://www.bafin.de/EN/Homepage/homepage_node.html" target="_blank" rel="noopener noreferrer">BaFin</a> has not failed in its monitoring obligations.</p>
<p>Indeed, Brussels would seek to understand if BaFin had breached EU legislation on the control of Wirecard.</p>
<p><strong>The discovery of the hoax</strong></p>
<p>Already in February 2019, the Financial Times had repeatedly reported that the accounts of the German company Wirecard show accounting irregularities in its operations in Asia. These allegations were disputed by Wirecard at the time of their publication.</p>
<p>It is thanks to the work of auditor Ernst &; Young that the scandal arose. Indeed, EY had to refuse to certify Wirecard&#8217;s 2019 accounts. It was only after that the CEO admitted the missing of 2.1 billion dollars.</p>
<p>EY then communicated to the press that &#8220;There are clear indications that this was an elaborate and sophisticated fraud involving several parties around the world&#8221;.</p>
<p><a href="https://g.co/kgs/eTC8ku" target="_blank" rel="noopener noreferrer">Markus Braun</a>, ex-CEO of Wirecard, resigned on Friday, June 19, and was arrested later in the week. He was suspected of falsifying the accounts and hiding the company&#8217;s losses from investors and customers.</p>
<p>The company, meanwhile, has filed for insolvency with the Munich court and for failure to honor its debts amounting to about $ 1.4 billion while the market value of the company&#8217;s shares fell 90% in one week.</p>
<p><a href="https://ustopbusiness.com/wp-content/uploads/2020/06/wirecard3-e1593330353232.jpg"><br />
<img class="aligncenter size-full wp-image-682" src="https://ustopbusiness.com/wp-content/uploads/2020/06/wirecard3-e1593330353232.jpg" alt="" width="1024" height="757" /></a></p>
<p><strong>What is the role of the German financial regulator BaFin?</strong></p>
<p>For Brussels, it is unacceptable that such a situation did not attract the attention of the German financial regulator BaFin, hence the investigation carried out against them to assess its role in the affair.</p>
<p>The European Commission has asked the European Financial Markets Authority (ESMA) to carry out a &#8220;factual analysis&#8221;.</p>
<p>According to AFP, the Commission&#8217;s director of financial stability, John Berrigan, said in a letter to the European Financial Markets Authority (ESMA) that: &#8220;The preliminary analysis should seek to establish a full description and assessment of the events, including the adequacy of the response of the supervisory authorities to these events, leading to the collapse of Wirecard AG”.</p>
<p>In response to this financial scandal, Moody&#8217;s agency investor service has withdrawn Wirecard&#8217;s ratings.</p>
<p><strong>The Fintech leader in turmoil</strong></p>
<p>As soon as Munich prosecutors launched an arrest warrant against him, Markus Braun went to justice. He was arrested on suspicion of hiding data in order to manipulate the market. The former CEO, on the other hand, deposit a bail of $ 5.1 million. He will, then, have to report to the police every week. Braun, also, advances in his defense that Wirecard could itself be a victim of fraud.</p>
<p>The indictment says, according to a statement from prosecutors, that Braun was accused of having inflated the balance sheet and the revenues of the company, &#8220;possibly in collaboration with other authors&#8221;, in order to &#8220;present the company as financially stronger and more attractive to investors and clients. &#8221;</p>
<p><strong>Wirecard facing its creditors</strong></p>
<p>A pioneer in financial technology, Wirecard provided the market with payment solutions to its customers to facilitate cashless transactions for consumers. The rapidly growing and highly competitive market has pushed Wirecard, considered one of the leaders in Fintech, to expand globally to establish itself in Asia and North America.</p>
<p>Wirecard said the money would not exist and that the $ 2.1 billion that Ernst &; Young auditors had not found in the company&#8217;s accounts doesn&#8217;t exist and has evaporated.</p>
<p>Likewise, two banks in the Philippines that hold the money in escrow accounts (where a third party receives and disburses money) deny any relationship with Wirecard, which makes the deal more than delicate.</p>
<p>In a press release, the board of directors of Wirecard said that: &#8220;based on further examination, there is a current probability that the balances of trust accounts amounting to 1.9 billion euros do not exist&#8221;.</p>
<p>Despite this situation, Wirecard is still trying to appease the cost and says it is in talks with the banks to keep it going and save a German fintech leader. It intends, in fact, to put in place measures to restructure and sell its units.</p>
<p>Nevertheless, Saturday morning, the financial still shocked and the effects are starting to be felt especially in the UK where the Financial Conduct Authority suspended Wirecard&#8217;s U.K. subsidiary Wirecard Card Solutions (WCS) Limited.</p>
<p><!-- END THEIA POST SLIDER --></p>