Wirecard files for insolvency after financial hole laid bare

I wonder how many companies in the world are basially built on warm words without any real value behind. I made the experience that a lot of people don&#x27;t really care if a company has positive revenue streams anymore, they don&#x27;t even know what a balance sheet is. They simply invest because other people do. And those other people invested because people before them did. This new style &quot;invest billions now in a lossy start up and hope for a positive cashflow in a few years&quot; is absolutely insane, it transformed the economy into a pure gambling hall.<p>What makes it even worse, in case of wirecard, their auditor EY had audited and certified wirecard&#x27;s balance sheet for years with no objection. They were satisfied with a clumsy fake audit certificate for 2 billion euros in a Philippine account! For how many companies EY did the same? How superficially do they check their customers?

Doesn&#x27;t surprise me in the slightest.<p>Worked for a fintech company a few years back that used Wirecard as the processor for one of their products. Somehow they managed to lose the PK&#x2F;FK relationship between accounts and transactions (or something like that). A whole lot of our customers suddenly started getting other people&#x27;s transactions on their accounts. It was the final straw that shutdown the entire product line and we moved on to other providers for new projects.<p>So, not at all surprised they don&#x27;t know where their money is.

A total of around $2B has simply &quot;disappeared&quot; -- as in, no one yet has been able to figure out what happened to it.<p>I keep imagining a Monty Python-esque skit:<p><i>&quot;Was it stolen? We don&#x27;t know.&quot;<p>&quot;Was it spent? We don&#x27;t know.&quot;<p>&quot;Was it lent? We don&#x27;t know.&quot;<p>&quot;Was it transferred? We don&#x27;t know.&quot;<p>&quot;Was it burned? We don&#x27;t know.&quot;</i><p>Coincidentally, or maybe not, the company&#x27;s last fictitious balance sheet, which was published in November of last year, right before the scandal was revealed, reports approximately $2B in long-term debt.[a]<p>So, as much as Wirecard was in the business of processing financial transactions ($124B last year!), it was also secretly performing a magic act of borrowing money and making it disappear into thin air. In a way, it&#x27;s been an &quot;impressive&quot; performance.<p>On a more serious note, I hope Wirecard&#x27;s failure is not seen in hindsight as a &quot;Creditanstalt moment.&quot;[b]<p>--<p>[a] <a href="https:&#x2F;&#x2F;ir.wirecard.com&#x2F;download&#x2F;companies&#x2F;wirecard&#x2F;Presentations&#x2F;WDI_Investor_Presentation_9M2019.pdf" rel="nofollow">https:&#x2F;&#x2F;ir.wirecard.com&#x2F;download&#x2F;companies&#x2F;wirecard&#x2F;Presenta...</a><p>[b] The failure of Creditanstalt, an Austrian bank, in 1931, marks the beginning of the Great Depression in Europe: <a href="https:&#x2F;&#x2F;www.bis.org&#x2F;publ&#x2F;work333.pdf" rel="nofollow">https:&#x2F;&#x2F;www.bis.org&#x2F;publ&#x2F;work333.pdf</a>

Here&#x27;s the rest of the stack so far:<p><a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=23611347" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=23611347</a><p><a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=23573386" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=23573386</a><p><a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=23598824" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=23598824</a><p><a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=23438323" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=23438323</a><p>This, from a year ago, reads interestingly now: <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=19737344" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=19737344</a>

Invisibilia just released a great podcast about trust, based on the experience of a trader who was harassed by Wirecard. The trader, who was shorting Wirecard, was subject to surveillance, and a constant stream of phishing attacks.<p><a href="https:&#x2F;&#x2F;www.npr.org&#x2F;2020&#x2F;06&#x2F;02&#x2F;868001948&#x2F;trust-fall" rel="nofollow">https:&#x2F;&#x2F;www.npr.org&#x2F;2020&#x2F;06&#x2F;02&#x2F;868001948&#x2F;trust-fall</a>

This looks really bad for BaFin, they basically treated the Financial Times as criminals for blowing the whistle over the last few years.

Now is clear what the company motto &quot;Beyond payments&quot; means.

This is painful but it&#x27;s a step in right direction. They have to serve ongoing processes for a couple of more weeks&#x2F;months. All subsidiaries that can be sold will probably be sold to pay creditors. Hopefully all toxic parts will be removed and a few healthy ones will stay, in one way or another.

This is the second ceo who started to dress like steve jobs and became a fraud.

Anyone know if Transferwise Global debit cards are impacted by this?

The entire story is shameful. I can just hope the Germans learn lessons from this.

Will their cards still work?

<p><pre><code> Trade on shares in the company was suspended </code></pre> What does this mean? Is a certain stock exchange not executing trades anymore? Are all exchanges worldwide in sync not executing trades? If so, how is the sync achieved?<p>If it only was suspended at the Frankfurt stock exchange which is mentioned in the article, it would be interesting to see how it is doing at other exchanges.<p>Google is still showing realtime Frankfurt prices. Currently at a market cap of about €350M.<p>And what is the reason behind that? Is it guaranteed that shares of a company that files for insolvency are worth 0? And therefore the exchanges want to save uninformed investors from buying them?