from Hacker News

Wirecard files for insolvency after financial hole laid bare

by tchalla on 6/25/20, 9:26 AM with 159 comments

  • by simonkafan on 6/25/20, 12:44 PM

    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't really care if a company has positive revenue streams anymore, they don'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 "invest billions now in a lossy start up and hope for a positive cashflow in a few years" is absolutely insane, it transformed the economy into a pure gambling hall.

    What makes it even worse, in case of wirecard, their auditor EY had audited and certified wirecard'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?

  • by adwf on 6/25/20, 10:49 AM

    Doesn't surprise me in the slightest.

    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/FK relationship between accounts and transactions (or something like that). A whole lot of our customers suddenly started getting other people'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.

    So, not at all surprised they don't know where their money is.

  • by cs702 on 6/25/20, 1:37 PM

    A total of around $2B has simply "disappeared" -- as in, no one yet has been able to figure out what happened to it.

    I keep imagining a Monty Python-esque skit:

    "Was it stolen? We don't know."

    "Was it spent? We don't know."

    "Was it lent? We don't know."

    "Was it transferred? We don't know."

    "Was it burned? We don't know."

    Coincidentally, or maybe not, the company'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]

    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's been an "impressive" performance.

    On a more serious note, I hope Wirecard's failure is not seen in hindsight as a "Creditanstalt moment."[b]

    --

    [a] https://ir.wirecard.com/download/companies/wirecard/Presenta...

    [b] The failure of Creditanstalt, an Austrian bank, in 1931, marks the beginning of the Great Depression in Europe: https://www.bis.org/publ/work333.pdf

  • by dang on 6/25/20, 7:41 PM

  • by jdblair on 6/25/20, 11:00 AM

    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.

    https://www.npr.org/2020/06/02/868001948/trust-fall

  • by physicsguy on 6/25/20, 1:11 PM

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

  • by fbn79 on 6/25/20, 10:47 AM

    Now is clear what the company motto "Beyond payments" means.

  • by ivanche on 6/25/20, 11:17 AM

    This is painful but it's a step in right direction. They have to serve ongoing processes for a couple of more weeks/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.

  • by GrumpyNl on 6/25/20, 2:44 PM

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

  • by sixhobbits on 6/25/20, 10:17 AM

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

  • by the_mitsuhiko on 6/25/20, 10:00 AM

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

  • by lazylizard on 6/25/20, 12:43 PM

    Will their cards still work?

  • by TekMol on 6/25/20, 11:01 AM

        Trade on shares in the
    company was suspended
    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?

    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.

    Google is still showing realtime Frankfurt prices. Currently at a market cap of about €350M.

    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?