Wirecard goes down with dues worth $4 billion

 

Markus Braun,wirecard,wirecard ceo,wirecard Markus Braun,wirecard scame

In the tech industry at large, companies are gravitated towards new technologies, for any one of them can be the next Paypal or Facebook. And thus, when a scam breaks out, the numbers involved are usually mind boggling. That being said, Wirecard, the infamous payments company whose CEO is involved in perhaps tech world’s biggest scam, is going down, owing close to $4 billion to creditors.

The company had been leading down a dark path for some time now. It all started last year, when a series of reports in British newspaper Financial Times uncovered accounting irregularities in its Asian operations.

Then, things took a turn for the worse when EY, the company’s auditor for more than a decade, refused to sign off the 2019 accounts last week. EY explains that during the audits, it was provided with false confirmations with regard to escrow accounts and reported them to the relevant authorities. Wirecard, being guilty as it was, did not comment. And honestly, how can you when you are planning to pull off the fraud of the decade?

“There are clear indications that this was an elaborate and sophisticated fraud involving multiple parties around the world,” EY said in a statement.

In fact, Chief Executive Markus Braun was forced to admit that $2.1 billion of the company’s cash probably didn’t exist. He has been detained under the suspicions of inflating the company’s value by showing assets that he did not own.

The $2.1 billion in question was supposed to have been held by two banks in the Philippines. However, it was found last week that the money did not even enter the financial system of the country’s central bank.

The company’s shares tanked after the announcement. And by tanked, I mean a gargantuan 98% fall. The only option left for Wirecard was to file for insolvency, which it did. The company said that with 1.3 billion euros ($1.5 billion) of loans due within a week, its survival as a going concern was “not assured”.

Now, the money is gone. Yeah, that’s a cynical view of seeing it, but that’s the truth, according to Reuters, which has spoken with people familiar with the matter. Over the years, the creditors might see some dollars returning to their accounts, but for the most part, the $4 billion is gone.

German law firm Schirp & Partner said that they would file class action lawsuits against EY, the auditor which let Wirecard’s shady numbers pass for years.

“It is frightening how long Wirecard AG was able to operate without being objected to by the auditors,” partner Wolfgang Schirp said.

CYBER SECURITY

 Microsoft to host cybersecurity summit after CrowdStrike-induced IT outage

By Reuters

Aug 23 (Reuters) - Microsoft (MSFT.O), opens new tab said on Friday it would hold a summit in September to discuss steps to improve cybersecurity systems, after a faulty update from CrowdStrike (CRWD.O), opens new tab caused a global IT outage last month.

The conference marks the first big step by Microsoft to address the issues that affected nearly 8.5 million Windows devices on July 19, disrupting operations across industries ranging from major airlines to banks and healthcare.

The event will be held on Sept. 10 at Microsoft's headquarters in Redmond, Washington. The company will invite government representatives to the gathering, it said in a blog.

"The CrowdStrike outage in July presents important lessons for us to apply as an ecosystem," Microsoft said.

The outage raised concerns that many organizations are not well prepared to implement contingency plans when a single point of failure such as an IT system, or a piece of software within it, goes down.

"We look forward to bringing our perspective to the discussions with Microsoft and industry and government stakeholders on the need for a more resilient ecosystem," a CrowdStrike spokesperson said when contacted for a comment.

Analysts have said the outage has exposed risks of dependence on single-vendor providing one-stop shop for security solutions.

CrowdStrike, which has lost about $9 billion of its market value since the outage, has been sued by shareholders, who said the cybersecurity company defrauded them by concealing how its inadequate software testing could cause the global disruption.

Earlier this month, Delta Air Lines (DAL.N), opens new tab said it was pursuing legal claims against CrowdStrike and Microsoft, after the outage caused mass flight cancellations and cost the carrier at least $500 million.

CrowdStrike is scheduled to report its second-quarter financial results after the U.S. market close on Aug. 28.

CYBER SECURITY

 Meta says Iranian group tried to target Trump, Biden officials' WhatsApp accounts.

Aug 23 - Meta (META.O), opens new tab said on Friday it had identified possible hacking attempts on the WhatsApp accounts of U.S. officials from the administrations of both President Joe Biden and former President Donald Trump, blaming the same Iranian hacker group revealed earlier this month to have compromised the Trump campaign.

In a blog post, the parent company of Facebook, Instagram and WhatsApp described the attempt as a "small cluster of likely social engineering activity on WhatsApp" involving accounts posing as technical support for AOL, Google, Yahoo and Microsoft.

It blocked the accounts after users reported the activity as suspicious and had not seen any evidence suggesting the targeted WhatsApp accounts had been compromised, it said.

Meta attributed the activity to APT42, a hacking group widely believed to be associated with an intelligence division inside Iran's military that is known for placing surveillance software on the mobile phones of its victims. The software enables the team to record calls, steal text messages and silently turn on cameras and microphones, according to researchers who follow the group.

It linked the group's activity to efforts to breach U.S. presidential campaigns reported by Microsoft and Google earlier this month, ahead of the U.S. presidential election in November.

The company's blog post did not name the individuals targeted, saying only that the hackers "appeared to have focused on political and diplomatic officials, business and other public figures, including some associated with administrations of President Biden and former President Trump."

Those figures were based in Israel, the Palestinian territories, Iran, the United States and the United Kingdom, it added.

Telegram messaging app CEO Durov arrested in France

By Ingrid Melander and Guy Faulconbridge

Durov arrested in Bourget airport, police sources say

•Telegram is based in Dubai

•Durov has French and UAE citizenship

•Russia says Durov's rights should be respected

•Russian lawmaker: freedom of speech is dead in Europe

PARIS/MOSCOW, Aug 25 (Reuters) - Pavel Durov, the Russian-born billionaire founder and owner of the Telegram messaging app, was arrested at Le Bourget airport outside Paris shortly after landing on a private jet late on Saturday and placed in custody, three sources told Reuters.

The arrest of the 39-year-old technology billionaire prompted on Sunday a warning from Moscow to Paris that he should be accorded his rights and criticism from X owner Elon Musk who said that free speech in Europe was under attack.

There was no official confirmation from France of the arrest, but two French police sources and one Russian source who spoke on condition of anonymity said that Durov was arrested shortly after arriving at Le Bourget airport on a private jet from Azerbaijan.

One of the two French police sources said that ahead of the jet's arrival police had spotted he was on the passenger list and moved to arrest him because he was the subject of an arrest warrant in France.

Durov, who has dual French and United Arab Emirates citizenship, was arrested as part of a preliminary police investigation into allegedly allowing a wide range of crimes due to a lack of moderators on Telegram and a lack of cooperation with police, a third French police source said.

A cybersecurity gendarmerie unit and France's national anti-fraud police unit are leading the investigation, that source said, adding that the investigative judge was specialised in organised crime.

Telegram and senior Telegram managers did not respond to repeated requests for comment. The French Interior Ministry, police and Paris prosecutor's office had no comment. Durov faces possible indictment on Sunday, according to French media.

Russian lawmaker Maria Butina, who spent 15 months in U.S. prison for acting as an unregistered Russian agent, said Durov "is a political prisoner - a victim of a witch-hunt by the West." Durov's arrest led news bulletins in Russia.

Telegram, based in Dubai, was founded by Durov, who left Russia in 2014 after he refused to comply with demands to shut down opposition communities on his VK social media platform, which he has sold.

The encrypted application, with close to one billion users, is particularly influential in Russia, Ukraine and the republics of the former Soviet Union. It is ranked as one of the major social media platforms after Facebook, YouTube, WhatsApp, Instagram, TikTok and WeChat.

TELEGRAM

Durov, who is estimated by Forbes to have a fortune of $15.5 billion, said in April some governments had sought to pressure him but the app should remain a "neutral platform" and not a "player in geopolitics".

Durov came up with the idea of an encrypted messaging app as a way to communicate while he faced pressure in Russia. His younger brother, Nikolai, designed the encryption.

"I would rather be free than to take orders from anyone," Durov said in April about his exit from Russia and search for a home for his company which included stints in Berlin, London, Singapore a

nd San Francisco.

After Russia launched its invasion of Ukraine in 2022, Telegram has become the main source of unfiltered - and sometimes graphic and misleading - content from both sides about the war and the politics surrounding the conflict.

The platform has become what some analysts call 'a virtual battlefield' for the war, used heavily by Ukraine's President Volodymyr Zelenskiy and his officials, as well as the Russian government.

Russia's foreign ministry said it had sent a note to Paris demanding access to Durov, although it said that he had French citizenship.

Former Russian President Dmitry Medvedev said that Durov had misjudged by fleeing Russia and thinking that he would never have to cooperate with the security services abroad.

Medvedev, who regularly uses Telegram to criticise and insult the West, said Durov wanted to be a "brilliant 'man of the world' who lives wonderfully without a Motherland."

"He miscalculated," Medvedev said. "For all our common enemies now, he is Russian – and therefore unpredictable and dangerous."

Russia began blocking Telegram in 2018 after the app refused to comply with a court order granting state security services access to its users' encrypted messages.

The action interrupted many third-party services, but had little effect on the availability of Telegram there. The ban order, however, sparked mass protests in Moscow and criticism from NGOs.

'NEUTRAL PLATFORM'

Telegram says it "is committed to protecting user privacy and human rights such as freedom of speech and assembly."

Durov has previously accused U.S. law enforcement agencies such as the Federal Bureau of Investigation (FBI) of seeking to get a backdoor into the platform. The FBI has not commented on those allegations.

Telegram's increasing popularity, however, has prompted scrutiny from several countries in Europe, including France, on security and data breach concerns.

Musk, billionaire owner of X, the social media platform formerly known as Twitter, said after reports of Durov's detention: "It's 2030 in Europe and you’re being executed for liking a meme."

Outside the French embassy in Moscow, a lone protester held up a sign reading: "Liberté pour Pavel Durov".

(This story has been refiled to fix a grammar in the first bullet point)