The Swiss Financial Market Supervisory Authority (FINMA) announced that it has forced FlowBank, a cryptocurrency-friendly online bank that has business dealings with TrueUSD stablecoin issuer Techteryx, crypto asset management company CoinShares and the world's largest cryptocurrency exchange Binance, to go bankrupt due to major violations.
FINMA finds FlowBank in serious breach of capital adequacy requirements
In a statement on June 13, FINMA pointed out that FlowBank took closure measures because it no longer had the minimum capital required for business operations and there was no possibility of restructuring. There were concerns about the bank's excessive debt.
Previously, FINMA found in its investigation that FlowBank had seriously breached its obligation to hold adequate capital and concluded that the bank had to be liquidated.
Founded in 2020, FlowBank provides cryptocurrency trading services and is the banking partner of Techteryx, the stablecoin issuer behind TrueUSD. CoinShares owns a portion of FlowBank, which also provided banking services to Binance.
FINMA protects customer assets and promises to assist in fund recovery
FINMA stressed that customers with funds not exceeding CHF 100,000 (about $111,710) will be protected first, and the regulator will work to help customers recover these funds as quickly as possible.
It is reported that FlowBank has total assets of 680 million Swiss francs (about 760 million US dollars), manages more than 22,000 customer accounts, and has about 140 employees worldwide.
FlowBank’s compliance issues have been around for a long time
One year after its launch, in October 2021, FlowBank was subject to its first enforcement action after FINMA found serious violations of regulatory law, particularly with regard to capital requirements. Twelve months later, independent auditors were appointed to monitor FlowBank’s progress towards returning to compliance.
In June 2023, as more problems emerged, FINMA appointed another supervisor to oversee FlowBank’s financial activities and further investigate its compliance failures. The investigation uncovered a large number of high-risk business relationships and the processing of multiple large transactions without proper due diligence.
Meanwhile, FINMA ordered the revocation of FlowBank’s banking license on March 8, 2024, but the ruling has not yet come into force as FlowBank is still awaiting the outcome of its appeal to the Federal Administrative Court. #FlowBank #破产 #违规
Conclusion:
FlowBank’s bankruptcy highlights the strict regulatory requirements that financial institutions must adhere to even in crypto-friendly Switzerland. FINMA’s decisive action protects the interests of its clients and underscores the importance of compliance in the financial industry.
As cryptocurrencies and traditional finance merge, regulators and market participants alike will need to increase their focus on risk management and compliance.