Halfway through this year, the Wirecard scandal shocked the world. What was once a tech darling, soon became a subject of controversy within financial circles. Before the news came to light, it appeared Wirecard could emerge as a dominant player in the crypto debit card space, but now, as Wirecard’s preliminary insolvency proceedings take place, the race to dominate the crypto card market has begun.
Kris Marszalek, the CEO of Crypto.com told me in an email that, “Following the FCA’s freeze of the UK license of Wirecard Card Solutions, after its German parent company filed for insolvency, we soon published a statement on our official blog. In less than 12 hours, all outstanding balances held on all European and UK cards were processed successfully back to cardholders’ crypto wallets.”
The dark past of crypto debit cards
In June, Wirecard filed for insolvency admitting 1.9 billion euros ($2.1 billion) absent from its accounts was non-existent. Former CEO Markus Braun was arrested and suspected of market manipulation. Wirecard was not the first, and it is unlikely to be the last to face regulatory scrutiny of its business practices in the crypto debit card space.
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In 2018, WaveCrest, a worldwide digital payment solutions provider, was ordered by Visa to close all Visa prepaid cards immediately they had issued. Visa’s demand led to the suspension of many customer’s prepaid cryptocurrency cards in Europe. Visa stated WaveCrest had not been following Visa’s membership regulations but did not offer specifics regarding non-compliance.
During the ICO craze of 2017, Central Tech promised the development of Centra Card, which allegedly could be used at Visa and Mastercard terminals to make payments tapping into the customer’s cryptocurrency holdings. The company employed celebrities such as boxer Floyd Mayweather and DJ Khaled to promote its ICO. Experiencing delays, Robert Farkas, co-founder of Centra Tech, pled guilty during this year for securities and wire fraud.