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Wirecard has filed for insolvency, just days after a $2 billion accounting scandal at the company burst into the open, crashing its stock and leading to the arrest of its former chief executive.

The digital payments company said in a statement Thursday it had opened legal proceedings in Munich “due to impending insolvency and over-indebtedness.” Shares in the company, which have lost 90% of their value in less than a week, plunged sharply in Frankfurt after the announcement was made.

Markus Braun, the Austrian tech CEO who built Wirecard (WCAGY) into one of Germany’s biggest companies, was arrested earlier this week on suspicion of having artificially inflated the company’s balance sheet and sales through fake transactions. Prosecutors said that Braun may have acted in cooperation with other perpetrators.

Wirecard acknowledged on Monday that €1.9 billion ($2.1 billion) in cash included in financial statements — or roughly a quarter of its assets — probably never existed in the first place. The company withdrew its preliminary results for 2019, the first quarter of 2020 and its profit forecast for 2020.

In a statement Thursday, Wirecard said its bankers were threatening to call in loans worth €1.3 billion ($1.5 billion) by July 1, and in the absence of an agreement with creditors, its future as a going concern could not be assured.

The scandal erupted last week when Wirecard said that its auditor, EY, could not locate the funds in trust accounts and refused to sign off on the company’s financial results. The fallout is raising questions over how the company’s regulators and auditors could have missed accounting irregularities that are already drawing comparisons to Enron, the American energy giant that filed for bankruptcy in 2001.

Braun, who has been released from custody on bail of €5 million ($5.7 million), has suggested that Wirecard may itself be the victim of fraud. His lawyer has not responded to requests for comment. Jan Marsalek, a board member and chief operating officer at the company, was fired on Monday.

The Wirecard story

Founded in 1999, Wirecard was once considered one of the most promising tech firms in Europe. It processed payments for consumers and businesses, and sold data analytics services. The company has nearly 6,000 employees in 26 countries around the world.

Braun, who also served as Wirecard’s chief technology officer, had led the company since 2002. A regular on the tech conference circuit, Braun often spoke of the transformational power of data and technology.

The former KPMG consultant was also the company’s largest shareholder, with holdings of just over 7%, according to data from Refinitiv. Some of Braun’s holdings were unwound last week when he sold €155 million ($173 million) worth of stock to meet a margin call.

Wirecard grew quickly with Braun at the helm. The company reported revenues of over €2 billion ($2.2 billion) in 2018, or more than four times the figure from 2013. Shares hit an all-time high above €190 ($213) in September 2018, the same month Wirecard replaced Commerzbank (CRZBF) in Germany’s list of top 30 companies. At that point, it was worth more than €24 billion ($26.9 billion).

The success story began to unravel in January 2019, when the Financial Times reported that Wirecard forged and backdated contracts in a string of suspicious transactions in Singapore. The company denied the report, but its shares plummeted. In February 2019, authorities in Singapore said they would investigate.

Another blow landed late last year, when the FT published a report and company documents suggesting that profits and sales had been inflated at Wirecard outposts in Dubai and Ireland. Wirecard again denied the allegations. But an investigation by KPMG published in April found the company had not provided enough information to fully explain issues raised by the FT.

The unraveling

In the end, the company couldn’t outrun the questions over its accounting. Wirecard mounted a search for the missing funds after EY declined to sign off on its books, but that effort ran into a dead end over the weekend in the Philippines, where the central bank denied the cash had entered the country’s financial system.

Wirecard appointed an American with experiencing in combating financial crime at the US Department of the Treasury as its new CEO, and hired an investment bank to work out a new financing strategy. But it was too little, too late. Wirecard shares plunged to less than €3 ($3.36) when they resumed trading on Thursday, reducing the company’s market value to just €330 million ($370 million).

Tough questions are now being asked in Germany about what went wrong.

Finance minister Olaf Scholz described the scandal as “extremely worrying” on Tuesday, saying the country must act quickly to improve oversight of companies such as Wirecard. “Critical questions arise over the supervision of the company, especially with regards to accounting and balance sheet control. Auditors and supervisory bodies do not seem to have been effective here,” Scholz said in a statement.

The Federal Financial Supervisory Authority, or BaFin, said last week that it is actively investigating whether Wirecard violated rules against market manipulation. But Felix Hufeld, who leads the regulator and sits on the European Central Bank’s supervisory board, described the scandal as a “total disaster.”

“It is a scandal that something like this could happen,” Hufeld said, in comments that were reported by Reuters and confirmed by the regulator.

— Stephanie Halasz and Eoin McSweeney contributed reporting.