Swiss Authorities Close FlowBank, Initiate Bankruptcy Procedures to Safeguard Clients and Financial Stability
Swiss regulators closed Flobank AG and began bankruptcy proceedings against the Zug-based digital asset bank. The move represents the latest blow to the cryptocurrency industry, which has been hit by a prolonged crypto winter.
FlowBank Shutdown Operations, Financial Statements
In a June 13 announcement, FINMA said it was closing Flowbank because it lacked capital. The Swiss regulator also revealed that Flowbank had seriously breached its formal banking obligations.
Thus, the regulator cited concerns that Flobank was overindebted and demanded that it be closed down as it was not fit for restructuring. Following this development, the regulator initiated bankruptcy proceedings against Flobank.
FINMA says priority is given to FlowBank customers with up to 100,000 Swiss francs (about $111,710). The goal is to help customers get their money back as quickly as possible.
Meanwhile, in a note to customers dated June 13, Flowbank said FINMA has decided to close the bank on June 12, effective from 8:00 a.m. onwards, on June 13th.
FINMA also appointed Swiss law firm giant Walder Wiess as the bank’s insolvency practitioner.
FlowBank’s Regulatory Report
Launched in 2020, Flowbank, partly owned by crypto-asset manager CoinShares, opened its doors to customers and allowed crypto trading activities. The bank partnered with TrueUSD stablecoin issuer Techteryx.
Earlier this year, there were rumors that Flowbank would provide banking services to Binance customers. FlowBank’s woes began in October 2021, when FINMA took enforcement action against it, citing “serious breaches of governing law.”
The regulator also said the bank did not meet the minimum capital requirements to run its business. Twelve months later, FINMA appointed an independent auditor to review the bank’s compliance.
As the bankruptcy story continues, it remains uncertain whether FlowBank’s crypto customers will get their deposits back. FINMA said it is up to the liquidator to decide whether to classify the cryptocurrencies as securities or bank claims as custody assets.
Conclusion: Swiss authorities‘ closure of FlowBank and the initiation of bankruptcy procedures represent a significant move to protect clients and uphold financial stability.