Wirecard's former boss has been arrested on suspicion of falsifying its accounts, after the German payments firm disclosed a €1.9 billion financial hole and questioned whether trustees had actually held money on its behalf.
Markus Braun turned himself in last night after Munich prosecutors issued a warrant for his arrest.
A judge ruled today that the 50-year-old Austrian could be released as soon as he posts €5m in bail.
In his 18 years in charge, Braun transformed an offshoot of the dot.com boom, known for handling payments for online gambling and adult entertainment sites, into a $20 billion-plus 'fintech' that won a place in Germany's blue-chip DAX index.
The former consultant portrayed himself as a tech visionary, telling US investors last autumn that Wirecard would increase revenues by six times by 2025 as digital payments boom.
Wirecard's meteoric rise was, however, accompanied by repeated allegations from whistleblowers, journalists and speculators that its revenue and profits had been pumped up through fake transactions with obscure partners.
Braun, who will have to report to police once a week, said last week in a video statement that Wirecard may have been the victim of fraud, without giving details.
He now stands accused of misrepresenting Wirecard's accounts and of market manipulation by falsifying income from transactions with so-called third-party acquirers, the Munich prosecutor's office said earlier.
Wirecard's implosion was described as a "total disaster" by Germany's financial regulator, who has come under fire for pursuing its critics and not the company.
German Finance Minister Olaf Scholz told Reuters today that lawmakers should decide quickly how to tighten regulation following the Wirecard scandal, which had exposed lapses by both auditors and regulators.
An external audit by KPMG in April could not verify cash balances, questioned Wirecard's acquisition accounting and was unable to trace millions in reported cash advances to merchants.
Braun, who said at the time that the allegations were not confirmed "in every point", quit on Friday after in-house auditor EY refused to sign off on Wirecard's 2019 accounts.
Wirecard's shares have since shed more than 80%.
New CEO James Freis, a former financial investigator at the US Treasury and compliance chief at the Frankfurt Stock Exchange, has opened urgent talks with some 15 banks that have lent €1.75 billion to Wirecard.
With Wirecard having failed to file audited financials, the banking consortium led by Germany's Commerzbank could call in the loans at any time.
Sources close to the talks said it was doubtful that Wirecard can continue as a going concern, while risks of litigation ruled out asset sales for now.
The main question is whether to allow the firm to keep operating for a couple of weeks, to allow more time to recover money, one source familiar with the talks said.
More than 5,000 staff are due to be paid at the end of June, and bankers would decide before then whether to pull the plug and trigger insolvency, the source added.