Wirecard made more than € 155 million in fake loans even while under investigation, the Financial Times says.
Intentional investor fraud
Even during the investigation, payment company Wirecard, which served several crypto debit cards, continued to distribute cash with a strategy that would destroy the company. This is according to new details released by the Financial Times, which found that around 155 million euros were paid out as unsecured loans in the first three months of 2020.
According to a timeline provided by the Financial Times, global auditing firm KPMG had been investigating Wirecard since October 2019. The investigation examined the hypothesis that Wirecard executives were intentionally defrauding Investors company, causing a spectacular collapse that proved to be a substantial setback for digital asset companies intending to work with Wirecard to provide Visa-like crypto debit cards.
Wirecard had been the focus of a Financial Times investigation as early as 2015 and internal investigations at Wirecard's Singapore offices began in March 2018. Wirecard shares peaked in August 2018.
The next two years saw many capital injections and increasing scrutiny by regulators and auditors, until Wirecard admitted in June 2020 that more than $ 2 billion was missing that had been recorded in the company's balance sheet.
Loans to suspicious companies
Documents received by the Financial Times indicate that loans in early 2020 included more than $ 115 million paid to Ocap, a mysterious Singapore-based company that had already failed to repay previous Wirecard loans by the end of 2019.
Ocap was previously managed by a former Wirecard executive, whose wife held a senior position at the company when the 2020 loans were extended. The collapse of Wirecard created problems for customers of crypto debit card companies TenX and Crypto.com in the UK and mainland Europe, damaging them economically.
Service was restored for some customers when Wirecard was cleared to resume regulated business several days later. The Financial Times found that Wirecard also lent over $ 45 million to a second Singapore-based company, Ruprecht Services.
The loans would be made as pre-payments to card payment processing industry partners to whom Wirecard outsourced the work outside its financial jurisdiction.
By March 2020, more than $ 1 billion had been lent to Asia-based partners deemed highly suspicious or even fraudulent companies. The collapse of Wirecard was a major blow to the European fintech sector and caused untold millions in losses for investors and customers.
But it also serves as a warning to crypto enthusiasts interacting with the traditional financial system, reminding us that without verification, fraud can lurk in places few expect to find it.
