The Swiss Financial Market Supervisory Authority (FINMA) on 13 June, 2024, announced the commencement of bankruptcy proceedings against FlowBank. The decision came after FlowBank was found to lack the minimum capital required for its business operations. FINMA also expressed concerns over potential over-indebtedness. “The bankruptcy proceedings aim to protect depositors. According to current calculations, the privileged deposits can be repaid in full out of the bank’s available funds,” said FINMA.
CoinShares, which owns approximately 30% of FlowBank, acquired an additional 20.8% stake in 2022, bringing its total holding to 29.3%, with voting rights equal to 32.06%. The acquisition was valued at CHF 24,740,000 at the time. A spokesperson from CoinShares told CryptoNews, “We don’t plan to comment on FlowBank’s news.”
FlowBank, launched in 2020 and founded by Charles-Henri Sabet, announced on its website that it had lost its FINMA license. “Commercial activities of the bank stopped at the opening of the bankruptcy. The bank is no longer authorized to carry out banking transactions or to act as a securities dealer. In this regard, all payments, purchases, and sales of securities can no longer be made. The Bank and its governing bodies are strictly prohibited from carrying out any legal act without the approval of the Liquidators,” stated FlowBank.
FlowBank’s troubles began as early as October 2021, when FINMA took enforcement action due to serious breaches of supervisory law, specifically concerning capital requirements. By October 2022, FINMA had mandated wide-ranging measures to restore compliance with the law and appointed an independent auditor to oversee their implementation.
The bankruptcy of FlowBank, an established player in the crypto-financial services sector, sends ripples through the market. Such a significant collapse underscores the vulnerabilities within the industry, potentially shaking investor confidence and leading to increased scrutiny and regulatory oversight. For stakeholders, including major investors like CoinShares, the bankruptcy represents not only a financial setback but also a challenge to their market reputation and future operations within the regulatory landscape.
Source: FINMA
