Wirecard AG
The Story
Wirecard was a German payment processor and financial services provider that was once a darling of the fintech world, valued at over $28 billion. The company claimed vast revenues from obscure third-party partners in Asia.
Financial journalists and short-sellers raised doubts for years, but the company aggressively sued critics. The fraud unraveled in 2020 when it was revealed that €1.9 billion in cash probably never existed. The company collapsed, filing for insolvency.
🚩 Red Flags
- Extremely complex and opaque business model
- Aggressive legal attacks on journalists and short-sellers
- Missing key documentation for major assets
- Suspicious third-party partners
- Auditors (EY) failed to detect fraud for years
⚖️ The Fallout
CEO Markus Braun was arrested and convicted on charges of fraud and market manipulation. COO Jan Marsalek remains a fugitive, believed to be in Russia. The scandal shook confidence in German finance and its regulatory body, BaFin.
📚 Lessons Learned
Even in a developed, regulated market, massive fraud can occur. The failure of auditors and regulators to act on red flags for years was a critical failure.
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