Anchored Coins warns of potential issues for AEUR amid FlowBank collapse

The bankruptcy of Flowbank could have repercussions for the Anchored Coins Euro (AEUR) stablecoin after the digital asset firm said it had “allocated a part of its reserve as collateral” to the Swiss bank. 

In a notice published on its website, Anchored Coins said while the bank guarantee issued by FlowBank had not been terminated, collateral for AEUR was part of the bank estate “without any privilege.” The stablecoin issuer said it was coordinating with the bank to withdraw all funds connected to its collateral but would halt issuance and redemption of AEUR and ACHF — backed by the Swiss franc — “until further notice as ordered by the authorities.”

“As the bankruptcy proceedings concerning FlowBank SA in liquidation are still in an early phase, it is not yet clear to which extent this part of our collateral can be recovered,” said Anchored Coins. “Hence, a risk remains that in case of a shortfall, the 1:1 redeemability cannot be upheld which would lead to a respective loss for the holders of AEUR tokens.”

The stablecoin issuer added:

“As required by Swiss law, such loss would be applied proportionally to all AEUR token holders.”

On June 13, the Swiss Financial Market Supervisory Authority announced that it would force FlowBank into bankruptcy and shut it down, claiming that the bank had “seriously breached” standards. Partly owned by CoinShares, the crypto-friendly bank has offered trading services since its launch in 2020, reportedly to Binance and other firms.

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At the time of its shutdown, FlowBank had roughly 680 million Swiss francs in total assets, or roughly $780 million. As of Aug. 15, AEUR had a roughly $63 million market capitalization.

The Swiss bank was also reportedly connected to Techteryx, the stablecoin issuer behind TrueUSD ( TUSD ). However, the firm reported on June 13 that it had had “no reserve exposure or banking relationship with FlowBank” since April.

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