Walder Wyss SA, the liquidators for the bankrupt FlowBank Ltd., released their first circular to creditors, outlining the actions taken since the Swiss regulator declared the bank bankrupt.
As of June 30, 2024, FlowBank held over CHF 390 million in assets, including shareholdings in London Capital Group Limited (UK) and LCG Capital Markets Ltd (Bahamas). The liquidators are seeking buyers for the UK unit while planning to discontinue operations in the Bahamas.
The liquidators also responded to claims made by FlowBank’s CEO, Charles Henri Sabet, concerning certain artworks at FlowBank’s premises, stating that these claims are considered legitimate under Swiss law.
Upon bankruptcy, FlowBank’s IT platforms, payment, and communication systems were blocked, and all transactions were canceled pending liquidator approval. Actions included closing CFD positions and converting foreign currency deposits to Swiss francs.
Since June 25, customers have been granted read-only access to their accounts via FlowBank’s e-banking platform, allowing them to check balances and the status of security deposits.
The liquidators have also launched a process for customers to request repayment of secured deposits up to CHF 100,000, as per Swiss banking laws. As of August 23, around CHF 45 million has been repaid to 5,800 accounts, with nearly 2,900 customers yet to claim their secured deposits.
The liquidators also reported the transfer of around 900 million in financial instruments since July 15, 2024, though manual processing may cause some delays. Efforts are being made to speed up the securities transfer process, the statement said.
Earlier in July, LCG Capital Markets Limited, also known by its trade name “FlowBroker,” ceased operations in the wake of bankruptcy proceedings against its parent company, FlowBank SA, launched by the Swiss Financial Market Supervisory Authority (FINMA) on June 13, 2024.
FINMA’s actions were prompted by FlowBank’s failure to meet capital requirements, maintain organizational adequacy, and fulfill disclosure and reporting obligations.
The downfall of FlowBank SA is rooted in a series of regulatory breaches. FINMA initially intervened in October 2021, citing serious violations of supervisory laws, particularly regarding capital requirements and risk management.
Subsequent measures included appointing an independent auditor and a monitor to oversee the bank’s activities. Despite these efforts, FlowBank continued to violate regulatory standards, including engaging in high-risk business relationships and inadequate financial reporting.
FlowBank, founded in 2020 by former LCG CEO Charles-Henri Sabet, offered services including cryptocurrency transactions and had strong ties with crypto asset manager CoinShares. However, FINMA’s findings of over-indebtedness and regulatory violations led to its downfall.
