PANews reported on August 16 that the collapse of the Swiss bank FlowBank, worth $781 million, is having a chain reaction on the cryptocurrency industry and threatening the existence of the stablecoin AEUR. This is because Anchored Coins AG, a Swiss company that issued the euro-pegged stablecoin AEUR, deposited part of its $63 million euro stablecoin reserves in the troubled bank. According to a statement on the company's website, the company has suspended the issuance and redemption of its tokens until further notice. The company has also stopped accepting new customers.
Anchored Coins stated: “As the insolvency proceedings related to the liquidation of FlowBank SA are still in the early stages, it is unclear how much of this portion of our collateral will be recoverable. Therefore, in the event of a shortfall, the 1:1 redemption rate may not be maintained, which would result in corresponding losses for AEUR token holders.” The company also stated that “such losses will be shared pro rata among all AEUR token holders, as required by Swiss law.”
These deposits provide a fallback redemption guarantee for Anchored Coins stablecoin holders in the event that Anchored Coins itself is unable to meet its obligations to redeem user tokens for fiat currency. With FlowBank entering liquidation, these funds are in limbo until Swiss authorities appoint a liquidator to oversee the return of deposits to creditors - which could take some time. Anchored AG cannot guarantee the recovery of all deposits from the affected banks, which could mean losses for stablecoin holders.
Earlier on June 13, it was reported that Swiss regulators closed the cryptocurrency-related bank FlowBank and initiated bankruptcy proceedings.
