UK Regulator Moves against Wirecard Subsidiary that Issued Visa Crypto Debit Cards

The Wirecard AG (ETR: WDI) subsidiary came under the ax of the Financial Conduct Authority (FCA) the UK regulator on Friday. Wirecard Card Solutions (WCS) issued a crypto-based Visa card to its customers but the company came under the scrutiny of the FCA after its parent company became the subject of investigation for financial misappropriation.

In a statement on Friday, a spokesperson for FCA said that WCS has been suspended from all regulated financial activities. He added that the company is not permitted to dispose of any of its assets.

The FCA referred to “ongoing events in Germany” which have a direct correlation with the suspension.

“Wirecard AG based in Germany is currently the subject of law enforcement interest and insolvency proceedings,” said the agency.

The statement implied that the FCA has collaborated with Wirecard UK to make sure that customers of the company are protected. The suspension of WCS is the result of several weeks of investigation by the regulator.

Wirecard Subsidiary in the UK

WCS is the service provider to Crypto.com and TenX. Reacting to the sanction on the company, Kris Marszalek the CEO of Crypto.com said that the suspension has affected its services in the UK. He said that its EU/UK card service will be disrupted. Nevertheless, all customers of Crypto.com will be refunded their balance within 48 hours. Marszalek said that the company plays to engage a new vendor for its crypto card service.

Efforts to get comments from TenX did not yield results as the company is yet to release a statement on the WCS suspension.

Wirecard became the focus of the investigation after its books were audited and $2.1 billion found missing. The company initially denied that the funds were missing, it later acknowledged that something was wrong after Markus Braun, the CEO retired. The company has already filed for insolvency but that has not stopped regulators such as FCA from moving against its subsidiaries such as WCS.

It is left to be seen what actions will be taken by Singapore, another country where Wirecard subsidiary issues a crypto debit card.

Not Going Under

Payment consultancy firm Polymath director David Parker said that it is unlikely that WCS will go out of business. He said that another firm may take over the operations of the company.

The company can also take advantage of passporting strategies to remain in business. This is a scenario in which a company can operate in another EU company when restricted in one using third-party services to accomplish this.

“Wirecard is passporting its services into all EEA countries and has established some agents and distributors in those countries,” the FCA added.

Meanwhile, the situation with Wirecard is really disappointing. Today its stock is down another 57%.