Swiss Regulator Shuts Down Binance-Linked FlowBank Amid Regulatory Crackdown

The Swiss Financial Market Supervisory Authority (FINMA) has announced the closure of FlowBank, a Swiss-based online bank offering cryptocurrency services to customers. This bank has a history with crypto platforms like Binance and CoinShares.

FlowBank in Financial Trouble

FINMA’s decision to close down FlowBank follows investigative results of the bank’s insufficient capital to continue its banking operations. According to an official announcement, FlowBank “no longer has the minimum capital required to operate its business.” The financial regulator also expressed concerns that the bank is likely “over-indebted” with no viable prospects for restructuring.

The financial watchdog added that FlowBank broke several financial laws, such as “information and reporting obligations to FINMA” and “the due diligence obligations to combat money laundering.”

FINMA partly trails FlowBank’s woes to its ties with digital asset platforms. Following its establishment in 2020, the Swiss bank has forged collaborations with crypto-focused projects. In 2021, the European investment company CoinShares bought a 9.02% stake in the Swiss-based bank, valued at $11.8 million at the time.

In January 2024, Binance enlisted FlowBank as a new partner for holding crypto assets like Bitcoin (BTC) for large traders. Sygnum, another crypto-friendly Swiss-based bank was included in Binance’s list.

While withdrawing its license for operation from FlowBank, FINMA has declared the banking institution a bankrupt firm. The bankruptcy took effect on June 13th. FINMA has appointed the law firm Walder Wyss AG as a liquidator to carry out the bankruptcy proceedings.

Binance and CoinShares Comment

Following FlowBank’s debacle, Binance and CoinShares have revealed the extent of exposure they had to the bankrupt bank. In an interview with Bloomberg, Binance CEO Richard Teng stated that customers have “very little assets” with FlowBank.

Hours after FlowBank’s bankruptcy was announced, CoinShares’ website assured the public that their exposure to the bank “is immaterial.” The announcement added that only £100,000 (worth over $126,000) is stuck in the bank’s custody.