Swiss regulator forces crypto-friendly Flobank into bankruptcy

Flowbank, an online Swiss bank that offered cryptocurrency trading services, has been shut down and forced into bankruptcy after Switzerland's financial regulator found it “grossly breached” the requirements to operate as a bank.

“This measure became necessary because the bank does not have the minimum capital required for its business,” the Swiss Financial Markets Regulatory Authority said in a statement on June 13.

“There is no hope of restructuring” and “there are fears that the bank is over-indebted,” FINMA added.

FINMA concluded last week that “the bank must be wound up” after finding that it had “grossly breached” its obligation to maintain adequate capital in an investigation last week.

FlowBank was launched in 2011. Launched in 2020, it offers crypto trading services and was a banking partner for Techteryx, the stable coin issuer behind TrueUSD (TUSD).

It is owned by crypto asset management company CoinShares and has even provided banking services to Binance, the world's largest crypto exchange.

Customers with funding of up to USD 111,710 (100,000 Swiss francs) will be protected first, FINMA warns.

FlowBank has $760 million (Swiss francs 680 million) in total assets, holds more than 22,000 customer accounts and employs approximately 140 employees worldwide.

One year after its launch, FlowBank entered the FINMA watch list

The Swiss financial regulator first took enforcement action against FloBank in October 2021, identifying “serious breaches of regulatory law,” particularly regarding capital requirements.

An independent auditor was appointed after 12 months to monitor FlowBank's road to compliance.

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FINMA appointed another regulator to oversee FlowBank's financial activities and to investigate compliance failures in June 2023 in the event of further issues.

That investigation found in particular “several high-risk business relationships” and carried out large transactions without due diligence, FINMA said.

FINMA ordered the bank's license to be revoked on March 8, 2024. However, the ruling is not yet legally binding as an appeal is pending at the Federal Administrative Court.

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