According to several media outlets, former chief executive Markus Braun of Wirecard has been arrested by German authorities for allegations of false accounting and unethical business practices.
On Monday evening, after an arrest warrant had been issued, Braun surrendered to Munich authorities. Prosecutors said Braun would be released as soon as he posts €5 million ($5.6 million) in bail but would be required to report to police weekly, Reuters said.
Braun resigned on Friday after the German payment service provider said that EY auditors could not find 1.9 billion euros (2.1 billion dollars) of cash on their balance sheet. The group disclosed on Monday that such funds actually did not exist.
When contacted by CNBC Tuesday, a Wirecard representative said no further announcements are currently being made.
Braun is accused of inflating the total assets and sales volume of Wirecard through a so-called "feigned income" from transactions with third parties to make the business appear more attractive to investors and customers, prosecutors have said.
Braun resigned as chief executive officer last week after an audit revealed billions of euros in anomalies on the company's ledger, causing the company's shares to crash.
On Monday, Wirecard divulged that its management board evaluates on the basis of further examination that there's a likelihood that bank trust account balances worth €1.9 billion ($2.1 billion) do not exist.
The German credit card issuer also disclosed that it had terminated its chief operating officer, Jan Marsalek, who had been placed under suspension from the board last week.
Wirecard was established in 1999 and was once considered as one of Europe's most lucrative tech companies. It processes consumer and corporate payments, and sells data analytics services. Wirecard employs almost 6,000 personnel in 26 nations around the globe.
Braun, who also served as the Chief Technology Officer for Wirecard, had been leading the business since 2002. According to Refinitiv data, the former KPMG consultant is the biggest stakeholder of the company with holdings of more than 7 percent.
Two major lenders from the Philippines that were said to have kept the missing funds in escrow accounts disclosed in recent days that they had no transactions with Wirecard, and the country's central bank chief revealed none of the missing $2 billion entered the Philippines' financial network.
Wirecard is now fighting to survive as the auditing crisis takes a new twist. The company disclose don Monday it was discussing access to credit with lenders and has hired investment bank Houlihan Lokey to come up with a sustainable funding plan. Wirecard is also looking at a possible restructuring that may see the elimination of some company divisions.
