The Swiss Financial Market Supervisory Authority (FINMA) has launched bankruptcy proceedings against the crypto bank FlowBank, accusing it of violating minimum capital requirements.

FlowBank’s reserves are insufficient to conduct banking activities, and the company’s management failed to take measures to comply with the requirements in the required time frame, FINMA claims. At the end of April 2024, FlowBank could have a large debt, officials insist. Given the lack of prospects for restructuring, the bank must be liquidated, FINMA ruled. The law firm Walder Wyss has been appointed as liquidator.

Initially, measures were taken against FlowBank back in October 2021, when FINMA identified violations of capital, business process and risk management requirements. In October 2022, the service appointed an independent auditor to oversee FlowBank. In June 2023, FINMA again identified insufficient capital by appointing a controller to oversee the site’s activities. As a result, it became clear to the authorities that FlowBank had repeatedly violated capital requirements, and that its financial statements were inaccurate and incomplete. FlowBank also failed to comply with its disclosure obligations to FINMA, the agency alleges.

The crypto bank entered into many high-risk agreements and conducted large transactions without addressing its “organizational gaps.” At the beginning of the year, the world’s largest crypto exchange Binance allowed large clients to store cryptocurrency in FlowBank.

Given the long-term non-compliance with licensing conditions and the bank’s failure to comply with capital requirements, FINMA ordered the revocation of FlowBank’s license in March 2024. However, the crypto bank protested the decision by filing an appeal with the Federal Administrative Court of Appeal.

In 2022, FINMA issued a license to the Swiss financial services provider Dukascopy Bank, which allows it to provide clients with cryptocurrency exchange services.