After our five-part exposé on Crypto.com (can be found on the front page of librehash.org currently), it appears that things have gotten even worse (somehow) for Crypto.com
We Missed a Critical Announcement
Somehow, we missed the biggest land mine of them all among the battlefield of red flags and sketchy facts we dug up on Crypto.com
Wirecard AG (Germany HQ) Announced its Insolvency on June 25th
What the Hell Happened?
It appears that the alleged rampant accounting fraud that FT (Financial Times) had spent the past year and a half reporting about turned out to be more than claims.
Breaking Down the Headline Above
Wirecard AG essentially told the world that their books were off by $2 billion without any logical explanation (there probably isn't one).
Even though they didn't publicly admit that this was due to negligent / criminal behavior on their behalf, the implications are clear - unless someone is inclined to believe that a bank was so financially literate in its accounting that their numbers ended up being off by $2 billion (with a 'B', not an 'M' here).
What Does This Mean For Crypto.com?
To be specific - by 'over', we mean that there isn't even a modicum of plausible deniability to suggest that Crypto.com could potentially launch and distribute their crypto cards - whether they were/are upfront, honest hard working individuals or complete crooks.
Why This is the Case
Crypto.com's entire project (and use case + value offer) is predicated on the premise that they have a relationship with Visa that will enable them to distribute credit cards bearing the 'Visa' brand name (similar to any other Visa debit / credit card), with the added ability for customers to pay for their goods at various vendors in cryptocurrency rather than fiat cash.
While the idea of manifesting and successfully launching such a product was a major piece of Crypto.com's value proposition - its prospective partnership with Visa was perhaps an equal draw for investors.
Visa Made the Idea Plausible
It goes without saying that if we're not discussing Mastercard, then Visa is on the menu.
And given that fact - Visa's reach, recognition, and thus, their ability to make an idea such as what Crypto.com proposed a viable one - is beyond question.
And, at one point in time, it appeared that Visa was ready to move forward with the concept.
Crypto.com's Card Issuance Cannot Happen Without Wirecard AG
As we noted in our previous 'deep dive' reports on Crypto.com, while the blockchain project's claims of a partnership / relationship with Visa did check out, this relationship was not direct.
Specifically, Wirecard AG (a financial institution) was the facilitator of the relationship.
This Was Part of Visa's Partner Program
We'll dig into this briefly - but first let's look at Wirecard's relationship with Visa.
Wirecard and Visa's Relationship
Again, despite the evidence of rampant fraud laden throughout the tale of Crypto.com (and their parent / card issuing parent - Wirecard), there were some surprising concrete indicators of legitimacy (thus lending credence to the idea that perhaps Crypto.com could bring this idea to fruition).
Brief Investigative Link Dump
Below are links that provide more information about the nature of Wirecard AG's relationship with Visa (B2B).
Latest press release about Wirecard + Visa = https://www.wirecard.com/en-us/company/press-releases/wirecard-and-visa-collaborate-on-fintech-fast-track-program (announces that they're looking at expanding into the MENA region - fair enough]
Also mentions that this partnership / co-expansion effort is facilitated through Visa's Fast Track program (?) ; link to the 'Fast Track' program can be found here = https://partner.visa.com
Looking a bit deeper into their website - there is a link leading to their "partner directory" ; can be found here = https://partner.visa.com/site/partner-directory.html
Now before we get into what was written above in '3', let's look at the requirements for becoming a Visa Partner (per their website).
Quick Summary: What is Visa's 'Partner Program'?
Visa's Partner Program is an initiative tht the company launched to essentially allow entities such as Crypto.com that are not financial institutions to still partner with Visa for a card distribution agreement of some sort.
The primary caveat (as we'll see below), is that entities such as Crypto.com must conduct this issuance through an already established Visa Partner.
In this case, Crypto.com was in line with Visa's standards in its pick of Wirecard AG (using the word 'pick' is a bit of a misnomer since Crypto.com is a subsidiary of Wirecard).
As stated above, Wirecard AG is a partner of Visa.
Specific Outlined Requirements For Visa Partner Program Eligibility
To be eligible for consideration / inclusion in Visa's Partner Program, the applying entity in question must have a partner that fulfills one of the following roles in their partnership with Visa:
A. "A banking relationship" (facilitating the banking & management of funds transacted via Visa cards)
B. "An issuer processor" (what Wirecard was supposed to function as for Crypto.com)
C. "Program Manager"
Untangling What We Know About Wirecard Now
From what we know, Wirecard does have the ability to serve the role of 'issuer/processor' (which is what the Bloomberg article reported).
However, there is no information that backs up the idea that crypto.com was able to obtain either of the additional two requisite elements for card issuance.
Concrete Definitions For the Roles Listed Above
Per Visa's website, the responsibilities for each respective role outlined above is as follows:
Program Managers: "Oversees your card program on the issuing bank's behalf - establishing key relationships , marketing to consumers and merchants, and helping to support profitability. They are typically responsible for developing, launching and managing the program through its lifecycle."
End-to-End Partners: "These partners offer the full-stack issuing solution that includes BIN sponsorship, issuer processing as well as program management - often outsourcing some capabilities, but providing a unified development interface. Not available in all regions."
An accompanying link with this information found here: https://partner.visa.com/content/gpp/learn/payments-program.html
Visa's Website Does Have Wirecard (perhaps not anymore though)
Visa's website still has Wirecard listed as a 'card issuance' provider.
Per the screenshot above, the listed solutions are:
Wirecard also fulfills the three requisite roles that a prospective company (crypto.com / monaco) would need to fulfill in order to be eligible for card issuance [program manager, BIN Sponsor, Issuer Processor, End-to-End] ; partner type also specifies "card issuance"
Visa Tokenization (https://usa.visa.com/dam/VCOM/Media Kits/PDF/visa-security-tokenization-infographic.pdf) = Contrary to what the name may imply, this Visa card role has nothing to do with cryptocurrency / virtual tokens. Instead, this plan involves the distribution of cards for which a security token (akin to JWT / 'cookies' for browsers) is distributed to the end user and used to authenticate the unique identity of the end user for retail merchants vs. the 16-digit card number being needed for the card's authorization.
Eureka - Finding Wirecard's Specific Partner Profile on Visa
Here is Wirecard's profile on Visa's website.
They are cleared for the Australia / Singapore / Philippines
Operating Region = AP (Asia-Pacific)
Wirecard's Visa Profile on Visa's Site Conclusively Shows That There Was No Framework in Place for Crypto.com to Issue Cards in Europe
Nothing that indicates that crypto.com would be able to expand into Europe or that they would have gotten the "green light" to do so.
There is also no evidence that they ever took advantage of the opportunity to enter into the Singaporean region either (although they are now under investigation in Singapore, so it makes sense that they would have been forced to forego such an opportunity)
Impact of All of This News on Crypto.com
If you're reading along thinking to yourself:
Wow! What a shitty week for Crypto.com! Their project must be tanking on the markets!
You would be dead wrong.
At the time of writing, their valuation still stands at a healthy $2 billion.
Check out the price action of $CRO below:
Up +4%, impressive. It appears that the dissolution of any possibility that Crypto.com's card issuance idea will come to fruition has left investors undeterred (assuming that there are not other forces at work buoying the price).
How About Crypto.com's Services?
Unfortunately for Crypto.com investors, it appears that the functionality of Crypto.com's various ecosystem tools is doing as well as its price.
Crypto.com Exchange Down Intermittently
When initially drafting this report, Crypto.com's exchange (crypto.com/exchange) was down for "maintenance" (we couldn't find any reason / explanation / summary of the maintenance that needed to be performed):
However, it seems that it is now (at this very point in time), back up:
As to whether the exchange is functioning correctly and/or allowing users to deposit / withdraw funds is unknown at this point.
Some Users Are Reporting Issues With Crypto.com's Platforms
Specifically, in Crypto.com's designated subreddit (https://www.reddit.com/r/Crypto_com), a few users have reported major issues / declines in the quality of service, with some alleging that various parts of Crypto.com's ecosystem are outright inaccessible.
(from their Telegram channel = https://t.me/CryptoComOfficial)
To Be Continued
(There's a lot that needs to be continued in this saga)