The industry-wide “contagion effect” is spreading to Crypto Valley. Covario, a Zug-based “one-stop-shop” for cryptocurrency-related brokerage services, is to file for bankruptcy. The 35 employees only learned of their employer’s fate shortly before Christmas.
Covario was an independent crypto prime broker for institutional investors based in Zug, which needed to stand out from the competition with cryptocurrency trading, custody, funding and various other tailor-made solutions. Shortly before the end of the year, the Swiss startup closed its doors, as revealed by an employee in an interview with Inside Paradeplatz. The website has since been taken offline. Apart from the resignations of senior executives, there is no trace of the bankruptcy in the extract from the commercial register of Covario AG.
Open questions for employees
Employees were surprised by the bad news just before the holidays. According to the insider, they last received their salaries at the end of October, although the crypto broker has not paid AHV dues since the start of the summer. Pension fund contributions due have also been open for months.
In recent weeks, the two leaders had opened new branches in England and the Far East and hired a dozen new employees. These additional salaries would have helped the company’s burn rate to continue to soar despite the difficult situation. According to the insider, Covario had recently “burned” about 500,000 francs in cash per month. The latest efforts to find a buyer for the company have meanwhile failed.
Reasons for Covario’s bankruptcy remain unclear
Questioned by the editorial staff of CVJ.CH, CEO Mark Banner replied that the prime broker “is not yet in a position to comment on the rumours.” It is therefore unclear how real the losses are. Inside Paradeplatz estimates that unpaid debts “are piling up in the millions.” It remains to be speculated whether the bankruptcy of former second-largest crypto exchange FTX has impacted Covario’s financial situation.
The only public information concerns payment requests against the Celsius credit platform, which has been insolvent since July. Court documents revealed a loss of $11.3 million soon after the case was opened. This puts Covario in sixth place among Celsius’ creditors.
