Some of the most impactful frauds in modern history, from the Enron scandal to the Bernie Madoff investment scheme, were carried out by malignant actors inside or at the helm of corporate entities who manipulated the tangled, esoteric financial records. This is precisely the kind of behavior blockchain technology is designed to obliterate.
The rapid demise of the German financial technology company Wirecard, which established itself in the blockchain community as a major crypto debit card issuer, seemingly belongs to the same category of events. In the long term, it might contribute to the growing public demand for increased transparency of corporate financial records and money flows.
Wirecard’s crypto fling
The power to issue cryptocurrency debit cards connected to the Visa and Mastercard systems is an enviable one. Businesses that find themselves in this position serve as a gateway between the realm of digital cash and the world where it can be exchanged for goods and services as handily as fiat money.
This middleman job is also quite lucrative, as companies that absorb both the volatility risks and trouble of compliance are entitled to hefty fees on every step of the process. The regulatory burden, however, is so onerous that there is usually no more than one major principal provider issuing the bulk of Visa and Mastercard cryptocurrency cards at a time.
A company called WaveCrest was once backing a handful of the most popular products in this space — such as Cryptopay, Bitwala and TenX — until it fell out of grace with Gibraltar regulators and was shown the door by Visa in early 2018.
A German payments group, Wirecard, then stepped in to fill the void, eventually onboarding crypto card providers Crypto.com and Wirex, as well as WaveCrest’s orphans, TenX and Cryptopay. A rare European fintech success story, Wirecard rose to prominence as a global payments processor and triumphantly entered DAX, Germany’s premier stock market index.
Wirecard was big in the fintech field long before the term came to be associated with the convergence of finance and blockchain technology. In a conversation with Cointelegraph, Seamus Donoghue, the vice president of sales and business development at Metaco — a provider of digital asset technology solutions — observed:
“Wirecard AG began processing payments for gambling and pornographic websites 20 years ago and has grown to become a bluechip DAX listed German tech darling. With a peak market capitalization of 25 billion dollars, it counts Olympus, Getty Images, Orange and KLM among its customers. As a payment service provider, merchants use it to accept payment through credit cards, PayPal, Apple Pay and others.”
Operating on a truly sizable scale within the traditional financial system, Wirecard “does not appear to have branched out to service crypto firms in any meaningful way,” said Jeff Truitt, the chief legal officer of Securrency — a firm providing technology infrastructure to the…
Read more:Wirecard Folds: A Blow to Crypto Cards, but a Chance for Blockchain
