Wirecard: when the fraudsters are bright Germans

[countryfree]

Some people told I was crazy to invest in BTC!
Better stick to real money, and put it in real banks, they say.

Have a look at Wirecard, it used to be the leading fintech in Germany.

https://www.reuters.com/article/us-wirecard-accounts/wirecard-files-for-insolvency-idUSKBN23W176

[gentlemand]

There've been alarm bells about them for years but the Germans were so enamoured at the idea of having a non industrial unicorn that I think they were indulged no matter what was staring them in the face.

When people decry shitcoins and the translucent shittiness and collective delusion of them it's easy to forget there's no shortage of the same thing in conventional areas of finance too.

[Lucius]

How easy is it to burn $4 billion and pretend nothing happened? Well, it seems that it is actually very easy, even in a country like Germany, which should be an example and role model to other countries in the world. If this is possible in Germany, ask yourself what is being done in some other countries that have a far lower standard when it comes to financial supervision.

CEO of Wirecard Markus Braun is released on bail of 5 million euros, and chief operating officer is already gone to safety (Philippines). All those who file lawsuits do not have to hope too much that they will get their money back, because there is simply no money. As the article states, the accusations against this company go at least 4-5 years into the past, but it is unbelievable that no one wanted to do anything all that time.

Audit firm EY expresses suspicion that this is a very sophisticated fraud "involving multiple parties around the world". But for me, there is no doubt that the greatest responsibility lies with all those who have been closing their eyes in Germany all these years, and their mouths are full of the rule of law that they impose on all EU members. Germany, first sweep in front of your doorstep, and then you can teach others about law, bribery and corruption.

[Darkoth89]

Good for Markus Braun that he just dumped more than 5 million of his 8.7 million Wirecard shares last week on Thursday and Friday and made a good 155 million euros. How else was he gonna pay his 5 million Euro bail-out?! ...   Maybe they should think about issuing a few million new stocks to pay for their debts. This plan alone helped Hertz to pump their zombie-stock.

Just a perfect example that there can be fraud everywhere and you can't be sure on the stock market either. And for all the critics who tell you that crypto/Bitcoin can go to zero any time, there are enough examples now that show it can happen also on the stock market. If you put all your eggs in the wrong basket, you gonna get scrambled eggs.

[Barnabe]

I'm still amazed by how the auditors didn't see that sooner. They probably could not move 4 Billions in 6 months, so errors in accounting should have been detected way sooner...

[Febo]

Some people told I was crazy to invest in BTC!
Better stick to real money, and put it in real banks, they say.

Have a look at Wirecard, it used to be the leading fintech in Germany.

https://www.reuters.com/article/us-wirecard-accounts/wirecard-files-for-insolvency-idUSKBN23W176

When there are points of failure then after long time there will be failures. Current fiat and bank system have many points of failure. Bitcoin fixes that. Yes Bitcoin also have points of failure, but less. It is just matter of time.  

[Lucius]

I'm still amazed by how the auditors didn't see that sooner. They probably could not move 4 Billions in 6 months, so errors in accounting should have been detected way sooner...

They see that something is wrong back in 2016, and at that time only 1 billion EUR was questionable. Why they let the amount increase x4 and the whole scam goes on for another 4 years is now a $4 billion issue. As I wrote in a previous post, there’s no way anyone didn’t know what was going on, but bribery has obviously done its dirty work as well as the fact that fines are mostly imposed for this type of crime.

This is another reason why the financial sector is very harsh on Bitcoin, which would deprive them of the possibility of such financial fraud. I just wonder if people will ever come to their senses and stop believing in models like this, which are actually classic fraud made possible by the state.

[hatshepsut93]

Yeah, scams aren't exclusive to crypto and they still happen in traditional finance. My favorite example is the ponzi scheme epidemic in 90's Albania, when ponzi schemes wrecked  the economy that was transitioning to capitalism.

Some people told I was crazy to invest in BTC!
Better stick to real money, and put it in real banks, they say.

But I don't agree that the fact that such large fraud happens with fiat money somehow means that crypto is legit - there's no connection here and crypto should be judged for its own merit. And we all know that nearly every ICO is a scam, and almost all alts are shitcoins.

[crzy]

Some people told I was crazy to invest in BTC!
Better stick to real money, and put it in real banks, they say.

Have a look at Wirecard, it used to be the leading fintech in Germany.

https://www.reuters.com/article/us-wirecard-accounts/wirecard-files-for-insolvency-idUSKBN23W176

The banks failed to monitored the account over the past years or they did this on purpose in connection with the company. Well, our local banks even connected with this case making a falsify documents to prove the existence of scammed money though they make an statement with this one already. They ruined everything and the person in charge with this should be put in jail, from the internal auditors or other department involve up to the external sources.

[Barnabe]

I'm still amazed by how the auditors didn't see that sooner. They probably could not move 4 Billions in 6 months, so errors in accounting should have been detected way sooner...

They see that something is wrong back in 2016, and at that time only 1 billion EUR was questionable. Why they let the amount increase x4 and the whole scam goes on for another 4 years is now a $4 billion issue. As I wrote in a previous post, there’s no way anyone didn’t know what was going on, but bribery has obviously done its dirty work as well as the fact that fines are mostly imposed for this type of crime.

This is another reason why the financial sector is very harsh on Bitcoin, which would deprive them of the possibility of such financial fraud. I just wonder if people will ever come to their senses and stop believing in models like this, which are actually classic fraud made possible by the state.

I don't know if it is bribery, it is more likely to be incompetence and conflict of interest. By not declaring anything in 2016, they could extend their contract a few more years. So if they have a doubt, they will just bury it and wait for 100% confirmation, but this wait will only make the problem bigger...

[exstasie]

Pretty amazing to see a company on the DAX go belly up this way.

Reminds me of this old Warren Buffett quote: “You only find out who is swimming naked when the tide goes out.”

Recessions = the tide going out. They have a way of revealing who has been swimming naked. This won't be the last corporate fraud scandal exposed during this downturn, that's for sure.

[Lucius]

This won't be the last corporate fraud scandal exposed during this downturn, that's for sure.

It probably won't be the last scandal of this type, but in Europe it is already being compared to Enron's in the US. But given that the EU, like the rest of the world, is facing great challenges and is looking for all possible straws of salvation, perhaps this is the ideal time to put this financial scandal in the background or to make a verdict after 5+ years that would only should meet the form of the rule of law.

Someone from the government should be held accountable for such negligence and omissions, and I am very interested in whether there will be dismissals or resignations.

[joniboini]

Their insolvency affects me as well. I can no longer use Payoneer card to withdraw my payment and if I proceed with bank withdrawal the fees are crazy. Wonder which company also have the same 'trouble', hope they can get rid it sooner.

[suchmoon]

I'm still amazed by how the auditors didn't see that sooner. They probably could not move 4 Billions in 6 months, so errors in accounting should have been detected way sooner...

That's what happens when the government delegates oversight to private entities who have an inherent conflict of interest, i.e. getting paid by the entity they're auditing. Not only that, the auditing companies are engaged in all sorts of "consulting" services.

EY was Lehman Brothers' auditor LOL. The only big auditing firm that ever suffered consequences I think was Arthur Andersen (Enron). Kinda sorta - Accenture still continues.

[peiReef7z]

They feel crazy about investing in BTC and say that sticking to real money is better, and putting it in real banks because they are afraid to take risks.
Fear is what causes them to seek safety even if safety is costly and makes them lose their money.
They are keen to get 10% that the banks give them, ignoring that their money has fallen further because of inflation.
Fear is what makes bank owners rich.

[Harlot]

Bro you can't really judge a whole industry or asset type in one or more dirty fraud inside them because if you do then the crypto industry won't be different. We have our fair share of big scams running around the industry since it has started from HYIP sites to fake cloud mining sites and even to crypto projects like BitConnect who have scammed hundreds of people oh and there are also exchanges where investors money that have either been hack or at least lost forever like the one in QuadrigaCX. The ones I named are one of the biggest examples where investors trusted their money in the crypto industry and they lost millions from it. So you can't really make this an angle to say cash has a lot of scams happening because the crypto industry is no different.

[jacafbiz]

The issue with Wirecard just shows how complacent our government agencies are, some independent journalists have been raising this issue about Wirecard but the choose to look other way, I believe there are many Wirecards we do not know about. I just hope it won't have huge negative impact on the Crypto projects.

[figmentofmyass]

It probably won't be the last scandal of this type, but in Europe it is already being compared to Enron's in the US.

that occurs to me as quite an exaggeration. the estimated losses in the enron collapse came to $74 billion---and that's in 2001 dollars, which were worth 45% more than today's dollars in terms of inflation. $4 billion is a drop in the bucket by comparison.

[alani123]

I was about to call this a legislative failure, but it seems to me that it's more about the system being at fault for allowing something like this to happen.

Greece had a similar case where executives of a company made the market consider their company has an great value by claiming they had more store locations than in reality. The company (folli follie) was forced to restructure after posting inflated sales records and store locations. It took a foreign fund to send out reporters in order for this to be uncovered. Of course Greek stock exchange already didn't have a great reputation but this was yet another blow.

For Germany to have something like this happen, it shows that the current financial system is full of holes. When the entire system for the transaction of money and value is based on trust, things like this are bound to happen. What if in Wirecard's case the auditor had decided to just take a lump sum payment and continue being dishonest? Probably nobody would have found out for at least a few years. The losses could have even been blamed on something arbitrary in the end.

The issue for me lies in the fact that the banking system and stock markets have not so far in their history cared to provide an independently verifiable way to confirm funds to the public. We've seen banks collapse and we've also seen company failures of huge proportions like the ones of Enron. With bitcoin, this could have been prevented. A simple signature from owned addresses and the issue of trust is solved on a whim...

Sadly many companies in the so called "blockchain space" look into permissioned blockchains and other such doomed to fail buzzwordy technologies instead of adopting the one true cryptocurrency.

[suchmoon]

that occurs to me as quite an exaggeration. the estimated losses in the enron collapse came to $74 billion---and that's in 2001 dollars, which were worth 45% more than today's dollars in terms of inflation. $4 billion is a drop in the bucket by comparison.

Apples and tomatoes. ~$74 billion was Enron's peak marketcap and it evaporated in the bankruptcy. Wirecard's peak marketcap was $28 billion if you want to compare to that, and it's around $0.15 billion at the moment. But I think it's highly misleading to treat share price pump as a loss.

IIRC Enron's creditors got about half of their money back. I don't know what the debt situation is with Wirecard.