Key Takeaways
- FINMA claimed that there existed “well-founded concerns that the bank is currently over-indebted,” with “no prospect” of a restructuring.
- FINMA stated that lender “no longer had sufficient capital for its operations as a bank.
FlowBank, a Geneva based online brockerage and crypto trading bank has been shut down and forced into bankruptcy after Swiss Financial Market Supervisory Authority (FINMA) claimed that the lender “seriously breached” standards required for it to operate as a bank.
FINMA stated that lender “no longer had sufficient capital for its operations as a bank”. In its official statement, the financial regulator further claimed that there existed “well-founded concerns that the bank is currently over-indebted,” with “no prospect” of a restructuring.
Customers with cash deposits in Swiss accounts under their names are eligible for reimbursement up to CHF 100,000 per client. The liquidators are preparing the terms and conditions for reimbursement, which will be communicated to clients soon.
FINMA while acknowledging FINMA’s decision to shut it down stressed that it aims to help customers recoup their funds “as quickly as possible.”
Walder Wyss, a top Swiss law firm, has been appointed by FINMA to serve as bankruptcy liquidators for the bank.
FlowBank, launched in 2020, offered crypto trading services and was the banking partner for Techteryx, the stablecoin issuer behind TrueUSD (TUSD). The bank held assets totaling CHF 680 million ($760 million) and also managed an impressive 22,000 clients.
FINMA’s first enforcement action against FlowBank came in October 2021, when it identified “serious breaches of supervisory law,” particularly regarding capital requirements.
FINMA has long been of the opinion that while new technologies like digital assets promise efficiency improvements in the financial industry, they also increase the threats of money laundering and terrorism financing.
The regulatory watchdog also expressed concerns that the purportedly greater potential for anonymity and the global nature of such financial tools make them very attractive avenues for money laundering and other similar crimes.
