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Swiss Regulator Shuts Down Crypto-Linked FlowBank and Starts Bankruptcy Process
FlowBank, a Swiss online bank that offered customers exposure to cryptocurrencies, has been shut down and bankrupted by the Swiss financial regulator.
The Federal Financial Market Supervisory Authority (FINMA) announced its decision to close FlowBank on Thursday, saying that the lender “no longer had sufficient capital for its operations as a bank” and that minimum capital requirements were been “significantly and seriously violated.” FINMA also said there were “well-founded concerns that the bank is currently over-indebted” and that there was “no prospect” of a restructuring.
In a letter to customers published on FlowBank’s website, the bank said FINMA’s decision to close it was made yesterday. Walder Wyss, a leading Swiss law firm, has been appointed by FINMA as the bank’s insolvency practitioner.
FlowBank launched in 2020 and has had extensive ties to cryptocurrencies, including partial ownership by crypto asset manager CoinShares which, in 2021, purchased a 9% stake in the bank for $11.8 million. Following CoinShares’ investment, the bank began offering its customers the ability to buy, sell and hold cryptocurrencies and other tokenized assets directly from their FlowBank accounts.
Earlier this year, it was reported that Binance, the world’s largest cryptocurrency exchange, would do so allow larger traders to store their crypto assets at FlowBank or Sygnum, another crypto-friendly Swiss bank.
According to a document published on FINMA’s website, FlowBank customers with deposits of up to 100,000 Swiss francs (about $111,710) are considered protected and will receive their money back within seven business days.
The future of customer crypto deposits, however, is less clear. FINMA said it is up to the liquidator whether the cryptocurrencies will be classified as assets in trust that will be treated as securities in the bankruptcy process or whether they will be treated as “claims against the bank”.
FlowBank could not be reached for comment. All the bank’s web pages literally inform customers of the bank’s closure. The bank’s Twitter account has been deactivated.