Swiss Regulator Declares FlowBank, Linked to CoinShares, Bankrupt

The Swiss Financial Market Supervisory Authority (FINMA) has initiated bankruptcy proceedings against the local online bank FlowBank.

#FINMA eröffnet Konkurs über die FlowBank SA: https://t.co/DGxN8mzde5
Informationen zum Konkursverfahren stellt die FINMA auf ihrer Webseite zur Verfügung: https://t.co/S00N1ASeVo pic.twitter.com/NkCOi88mB3

— Eidgenössische Finanzmarktaufsicht FINMA (@FINMA_media) June 13, 2024

“This measure became necessary because the bank no longer has the minimum capital required to operate. There are also concerns that the bank is excessively indebted. The aim of the bankruptcy procedure is to protect depositors,” the statement said.

According to FINMA, the bank’s management failed to take steps to address the issues.

Regulatory representatives saw no prospects for restructuring and announced the need to liquidate FlowBank. The procedure will be handled by the law firm Walder Wyss AG.

The bank had been operating since 2020, offering cryptocurrency trading services. It partnered with Techteryx, the issuer of the stablecoin TrueUSD. In March 2023, the latter already faced issues due to the closure of Signature Bank.

In 2022, the digital asset management company CoinShares acquired a 20.8% stake in FlowBank for 24.74 million CHF (~$26.5 million at the time). Along with previous strategic investments made in October 2021, the firm increased its shareholding in the bank to 29.3% with a voting right share of 32.06%.

FlowBank’s services were used by Binance. In a comment to Bloomberg, the head of the crypto exchange, Richard Teng, stated that there are “very few assets” in the Swiss institution.

Back in August 2023, crypto custodian Prime Trust filed for bankruptcy under Chapter 11 of the U.S. Code in a Delaware court.