The Swiss financial authorities closed and declared bankruptcy of FlowBank, an online Swiss bank that exposed its clients to cryptocurrency. The lender “no longer had sufficient capital for its operations as a bank,” according to the Swiss Financial Market Supervisory Authority (FINMA), which also stated that minimum capital standards had been “significantly and seriously breached.” FINMA made this announcement on Thursday. In addition, FINMA stated that there is “no prospect” for a restructuring and “well-founded concerns that the bank is currently over-indebted.”
In a letter to customers posted on FlowBank’s website, the bank said FINMA’s decision to shut it down had been made yesterday. Walder Wyss, a top Swiss law firm, has been appointed by FINMA to serve as bankruptcy liquidators for the bank.
Launched in 2020, FlowBank has strong ties to the cryptocurrency space, with ownership held in part by cryptocurrency asset manager CoinShares, who paid $11.8 million in 2021 to acquire a 9% interest in the bank. Following CoinShares’ investment, the bank started letting its clients use their FlowBank accounts to buy, sell, and hold tokenized assets, including cryptocurrency. The biggest cryptocurrency exchange in the world, Binance, was reportedly going to let bigger traders store their cryptocurrency holdings in FlowBank or Sygnum, two more cryptocurrency-friendly Swiss banks, earlier this year.
A document on the FINMA website states that clients of FlowBank who have deposits of up to 100,000 Swiss francs, or about $111,710, are safeguarded and will get their money returned in seven working days. Less is known about the clients’ cryptocurrency deposits’ future. According to FINMA, the liquidator will decide whether to classify the bitcoins as custody assets that would be handled like securities during the bankruptcy procedure or as “claims on the bank.” A statement from FlowBank could not be obtained. The message advising customers of the bank’s closure can be found on all bank webpages.The bank has deleted its Twitter account.