Swiss crypto bank FlowBank was declared bankrupt by the local monetary authority! Cryptocurrency in trouble?

This site (120BTc.coM): As a partner of the stable currency TrueUSD (TUSD) and the exchange Binance, the Swiss Monetary Authority (FINMA) forced crypto banks yesterday (13) FlowBank entered bankruptcy proceedings, saying it seriously violated the minimum capital standards required to operate a bank, was over-indebted and had almost no possibility of bankruptcy reorganization.

FlowBank was closed by the Swiss Monetary Authority: High-risk business caused trouble

FINMA pointed out in the latest statement that it had forced the initiation of bankruptcy proceedings for the crypto bank FlowBank on June 13, saying that it had no Sufficient funds to continue bank operations.

FINMA stated that FlowBank can no longer afford the funds required for its business operations, and there is no prospect of restructuring. It is even more worried that the bank may become insolvent: We found that FlowBank is seriously Non-compliance with regulatory requirements, particularly in relation to capital requirements, organizational structure and risk management.

Among them, the following oblique statements from the regulatory agency seem to be alluding to the cryptocurrency business undertaken by the company: The bank established many high-risk business relationships without comprehensive assessment, and Process large transactions.

It is reported that FlowBank holds approximately US$760 million in assets and has more than 22,000 users.

Users with a deposit of less than 100,000 Swiss francs will have priority in repayment. What about cryptocurrency?

In addition, FlowBank stated on its official website that users with deposits of less than 100,000 Swiss francs (approximately US$111,000) will be protected and will give priority to repayment within 7 working days.

FINMA also emphasized in the statement that the bank’s existing funds will be able to be repaid in full to the above-mentioned users, so the Swiss Bank Deposit Insurance Scheme (esisuisse) will not participate assist.

However, some people are worried that the repayment of some users’ crypto-assets may become difficult: FINMA claims that whether cryptocurrencies can be regarded as custodial assets treated as securities, they will also be classified in bankruptcy proceedings. , it depends on the liquidator.

Has always been a partner of TUSD and Binance

As a bank that has invested heavily in crypto asset management company CoinShares, FlowBank has been providing cryptocurrency trading services for many years.

It is reported that the bank is a cooperative bank of Techteryx, the issuer behind the controversial stablecoin TrueUSD (TUSD), and is said to provide crypto asset custody services for Binance.

Are cryptocurrencies really in trouble?

FlowBank, established in 2020, was placed on FINMA’s watch list a year later, saying it violated regulatory regulations and operated many high-risk businesses. In response, the agency appointed independent auditors to monitor its compliance process and financial activities, but violations have been repeatedly discovered in the past two years.

Until March this year, FINMA finally ordered the revocation of FlowBank’s license. However, while waiting for it to take effect, news of bankruptcy broke out.

However, is it really the so-called "high-risk business" of cryptocurrency that is causing trouble? Perhaps there is nothing inherently wrong with financial products, but improper allocation of investment portfolios and changes in interest rate policies, whether traditional banks, crypto banks or exchanges, may face financial crises.

In March last year, the United States faced the collapse of three banks, Silvergate, Silicon Valley Bank (SVB) and Signature Bank, in just one month. It also showed that if traditional finance does not handle asset management properly, it will still... There is a risk of a run or bankruptcy.

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