Swiss financial watchdog the Financial Market Supervisory Authority (FINMA) announced that FlowBank, a supporter of Bitcoin (BTC) and cryptocurrencies, is bankrupt and closed.
FINMA stated that FlowBank went bankrupt due to insufficient capital and significant debt.
FINMA stated that after an investigation last week, it was determined that the bank had seriously violated its obligation to maintain sufficient capital and said, “The bank should be liquidated.”
“The Swiss Financial Market Supervisory Authority, FINMA, is opening bankruptcy proceedings against FlowBank SA on June 13, 2024.
This measure became necessary because the bank no longer had the minimum capital required for its business activities.
There are also fears that the bank is over-indebted.
The purpose of bankruptcy proceedings is to protect depositors. According to current calculations, all privileged deposits can be repaid from the bank's existing funds. “
Cryptocurrency Refunds Remain Uncertain!
FINMA stated that refunds will first be given to customers with funds up to 100,000 Swiss francs ($111,710). However, the status of customers' cryptocurrency assets remains unclear.
FINMA said it is up to the liquidator whether cryptocurrencies will be classified as custody assets, treated as securities in the bankruptcy process, and whether they will be treated as bank liabilities.
FlowBank, which started operating in 2020, became interested in cryptocurrencies after CoinShares purchased 9% of the bank's shares in 2021 for $11.8 million.
Following CoinShares' investment, the bank began offering customers the ability to buy, sell and hold crypto and other tokenized assets directly from their FlowBank accounts.
FlowBank was also the banking partner of Bitcoin exchange Binance, providing custody services to some large investors who did not want to leave their funds on the exchange.
*This is not investment advice.