- >Crypto.com Safely Returns Customer Funds After Wirecard Debacle
Crypto.com Safely Returns Customer Funds After Wirecard Debacle
Wirecard is a company based out of Germany that offers digital payment solutions around the world. Some companies such as Crypto.com relied on wirecard for payment processing. On June 22nd, 2020, it was discovered that Wirecard is in fact missing about $2.1 billion dollars. The main question on everyone’s mind is; How exactly does a company lose $2.1 billion dollars? The auditors in charge of signing off on Wirecard’s books is Earnst and Young (EY). Wirecard stock plunged more than 85% after EY was unable to determine the location, and even the source of the missing money. The effects of this event are felt even in the world of cryptocurrency.
Keegan Francis | Oct 13, 2020
Crypto.com Changes Payment Strategy
The rapid fall of Wirecard was felt by crypto visa debit card issuer Crypto.com. Wirecard was responsible for issuing the actual physical Crypto.com visa debit card. As the situation began to unfold, Crypto.com was swift to keep its users appraised on the status of their funds. The CEO of Crypto.com, Kris Marszalek had this to say.
“The funds are held at another bank (not Wirecard) as required by the FCA. To further clarify, Wirecard does not have custody of any crypto held by Crypto.com”
It became clear towards the end of the week that users cards were going to be unusable. Crypto.com users in the UK and EU are currently unable to fund their crypto visa debit cards.
“We will rapidly proceed to credit the funds back to our users’ crypto wallets,” Marszalek said.
Crypto.com made good on their promise. At the time of writing, all funds connected to users’ visa debit cards have been credited to their wallet balance. This is a demonstration of Crypto.com’s customer-first approach. The current course of action for Crypto.com is to find another issuer of visa debit cards for the UK.
A Gap in the Payments Industry
What does the insolvency of Wirecard do to the customers it was serving? Much like Crypto.com, previous customers of Wirecard will be forced to find alternative payment options. This is essentially a golden opportunity for FinTech and money service businesses operating in the UK and EU. The gap in the industry is an opportunity for a legitimate operator to step into the black hole left by Wirecard. When an old system crumbles, it is simultaneously a good opportunity to replace it with a better one.
Blockchain to the Rescue
Blockchain was built for auditability, accountability, and traceability. The properties that are built into blockchain payment networks are just the sort of attributes that could have prevented the Wirecard issue. The parties responsible for oversight and accounting internal to Wirecard could have used the ability of instantaneous audits. In a perfect world, the problem of missing money would never have grown to the size of $2.1 billion dollars. The fact that this problem was able to become as large as it was is a testament to the depth of corruption inside the organization itself. While the cause of the scandal is still yet to be revealed, the implications are emerging. One thing is for sure, the Wirecard scandal has left a $2.1 billion dollar gap in the industry.