TrueUSD bank FlowBank forced into bankruptcy
FlowBank, a Swiss bank that has historically been friendly to crypto firms, has been forced into bankruptcy by FINMA, the Swiss Financial Market Supervisory Authority.
The press release issued by FINMA claims that FlowBank “no longer has sufficient capital for its operations as a bank” and further claims that it’s worried that the bank is “over-indebted.”
Furthermore, the regulators are concerned that the “bank entered into numerous higher-risk business relationships and processed large transactions without properly investigating.”
FINMA previously ordered the bank’s license to be withdrawn, but that ruling has been held up during appeal.
The press release also notes that it intends to “repay deposits up to CHF 100,000” out of the bank’s remaining assets.
TrueUSD
Among the businesses that FlowBank was involved in was TrueUSD, a controversial stablecoin with links to crypto entrepreneur Justin Sun.
Sun has admitted he was a partner market maker for this stablecoin, but others have alleged that he owns or at least tried to purchase it.
TrueUSD used to disclose that FlowBank was where it stored a significant portion of its assets but eventually stopped these disclosures. As of today, its attestations still describe a ‘Swiss Depository Institution’ where funds are held.
Read more: TrueUSD attestations paused again, this time for improper ‘balances’
This attestation also gives us some insight into the roughly $503 million in assets supposedly backing this stablecoin. The vast majority of this is currently held at First Digital Trust in Hong Kong, with only ~$1.1 million currently held at the other depository institutions.
Protos has reached out to TrueUSD to determine how this bankruptcy will affect its operations, but at time of publication, it has yet to respond.
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