FlowBank, a Swiss-based online bank known for its cryptocurrency trading services, has been forced into bankruptcy by the Swiss Financial Market Supervisory Authority (FINMA) after failing to meet regulatory standards. According to a June 13 statement from FINMA, FlowBank was shut down because it "seriously breached" the minimum capital requirements necessary for its operations.

The regulator found no prospect of restructuring the bank and expressed concerns about its potential over-indebtedness, leading to the conclusion that "the bank must be wound up." This decision followed an investigation last week that highlighted FlowBank's significant shortcomings in maintaining sufficient capital.

FlowBank, which launched in 2020, was notable for its connections to various prominent entities in the crypto space. It served as the banking partner for Techteryx, the issuer of the TrueUSD (TUSD) stablecoin, and was part-owned by crypto asset management firm CoinShares. Additionally, the bank reportedly provided services to Binance, the world's largest crypto exchange.

FINMA assured that customers with up to 100,000 Swiss francs (approximately $111,710) in funds would be prioritized for protection, aiming to help them recoup their money "as quickly as possible." FlowBank holds $760 million (680 million Swiss francs) in total assets, manages over 22,000 client accounts, and employs around 140 staff worldwide.

FlowBank's regulatory troubles began in October 2021, when FINMA identified severe breaches of supervisory law, particularly concerning capital requirements. An independent auditor was appointed in October 2022 to monitor the bank's compliance efforts. Despite these measures, further investigations in June 2023 revealed additional issues, including "numerous higher-risk business relationships" and the processing of large transactions without proper due diligence.

As a result, FINMA ordered the withdrawal of FlowBank's license on March 8, 2024. However, this ruling is currently pending an appeal at the Federal Administrative Court.