Swiss financial regulators announced shutting down FlowBank on 13 June 2024, while forcing it into bankruptcy in the process. FlowBank is an online-only bank that offered crypto trading services to Swiss residents.
Regulators took action after it deemed the bank had “seriously breached” standards required to operate as a bank.
Swiss Regulators Speak Out On FlowBank Closure
A statement by the Swiss Financial Market Supervisory Authority (FINMA) said that “this measure became necessary as the bank no longer has the minimum capital required for its business operations.” FINMA also said that there is “no prospect of a restructuring,” as there are “fears that the bank is over-indebted.”
FINMA concluded that the bank had seriously breached its obligation to hold sufficient capital and that “the bank must be wound up.”
FlowBank, a Swiss bank, is bankrupt.
Financial Market Supervisory Authority (FINMA) opened bankruptcy proceedings against FlowBank SA (the Bank) with effect from 13 June 2024 at 8:00 a.m. As a consequence, the FINMA withdrew the license of the Bank as bank and securities… pic.twitter.com/UR91bbsRNE
— Satoshi Club (@esatoshiclub) June 13, 2024
History Of FlowBank – First Swiss Crypto-Friendly Bank
FlowBank launched back in 2020, and was a pioneering crypto-friendly bank in Switzerland.
Crypto asset management company, CoinShares, and Binance both have ties with FlowBank.
FlowBank has 680 million Swiss Francs ($760 million) in total assets, with over 22,000 client accounts and 140 employees globally.
FINMA has reassured customers that up to 100,000 Swiss francs ($111,710) in funds will be protected first. Furthermore, FINMA will prioritise helping investors recoup funds “as quickly as possible.”
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Swiss Regulators Have Been Keeping Tabs On FlowBank For 3 Years
FINMA first took action against FlowBank in October 2021. At the time, the regulator had identified serious breaches of supervisory law, specifically with regard to capital requirements.
A year later, in 2022, an independent auditor was brought on-board to oversee FlowBank’s moves, so that the bank is compliant with regulations.
In June 2023 FlowBank’s issues resulted in FINMA appointing yet another independent supervisor to watch over its financial activities and delve deeper into the bank’s failure to meet compliance criteria. This investigation was the final straw!
Shortly after, FINMA found that FlowBank was conducting “numerous higher-risk business relationships and processing high-value transactions without carrying out proper due diligence.”
3 years of investigation culminated in March 2024 when FINMA ordered the withdrawal of the bank’s license. The ruling will be appealed on a yet to be announced date at the Federal Administrative Court.
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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