In what looks like one of the biggest auditing scandals in recent times, shareholders of Wirecard have filed a lawsuit against ‘big four auditing firm’ Ernst and Young for allegedly manipulating the company’s assets that led to the disappearance of $2.1 billion from its balance sheet.
The year has been dramatic for Wirecard and its shareholders after EY postponed the issuance of its 2019 financial statement for the fourth time. This delay in the signing of its financial statement by the ‘big four auditing firm’ raised a lot of suspicions which later led to the uncovering of a missing $2.1 billion in cash from the balance sheet.
The shareholders allege that the auditing firm had played a key role which led to the scandal currently ravaging the company. In a recently published report by CNBC, EY had debunked the allegations pointing out that there are “clear indications that this was an elaborate and sophisticated fraud, involving multiple parties around the world in different institutions, with a deliberate aim of deception…” it goes on.
“Even the most robust and extended audit procedures” would have tough times pulling in a “collusive fraud” of this nature, EY further defended its stance. Schutzgemeinschaft der Kapitalanleger e. V. (SdK), a german shareholders association has filed for a criminal case against three of the EY auditors for the potential involvement in the accounting mayhem.
This Spells A Lot Of Trouble For The Once Regarded Payment Giant
On the other hand, Wirecard which was once regarded as a German fintech star has filed for insolvency. The situation has taken a huge negative toll on the company’s reputation which has triggered a massive selloff of its shares. The company’s share price has plunged by over 70% since the investigation was launched to look into the shady outcome.
Following this investigation, German authorities have arrested the Wirecard CEO Markus Braun (now former CEO), on suspicions of falsifying accounts. It was alleged that such a huge scandal couldn’t have happened under his nose without his direct involvement. The claims allege that the 32% loss out of the $6.5 billion Wirecard assets was possibly masterminded by the CEO and other concerned parties of interest.
Wirecard Creating a Ripple Effect
This development has negatively impacted crypto debit cards as Wirex, TenX, and CryptoPay, which are widely used crypto debit cards are issued by Wirecard. Crypto.com has also been mandated to seize operations and return all funds on the affected debit cards back to customers’ crypto-wallets. Several non-crypto debut cards such as Payoneer MasterCard were also issued by Wirecard, widening the scope and impact of this global fiasco.