Zondacrypto-affiliated fintech firm Femion files for bankruptcy in exchange crash fallout

Femion Technology, an entity linked to the failed Zondacrypto, has filed for bankruptcy, indicating the domino effect from the collapse of the leading Polish exchange.

The move follows the failure of its subsidiary TryPay to survive the saga. The latter served as the main payment gateway for fiat deposits, accounting for the bulk of the group’s revenues.

More Polish firms fall in wake of Zonda crypto exchange  demise

The Zonda-affiliated Femion Technology filed for bankruptcy protection this weekend after its shares lost almost all of their value over the past few weeks.

The fintech was brought down by the collapse of TryPay, its subsidiary, which processed Polish złoty payments for customers of the now insolvent Zondacrypto.

The exchange generated nearly 70% of the total revenue of the troubled group, Poland’s leading crypto news portal Bitcoin.pl noted on Sunday.

It highlighted the domino effect from its crash. Zonda halted client withdrawals early last month, amid widely reported liquidity issues.

Femion is controlled by its CEO, Przemysław Kral, who holds 49% of its stock, the Gazeta Wyborcza daily pointed out in an article.

The executive has been missing since mid-April, when he denied media reports based on a Recoveris analysis showing the platform had lost over 99% of its reserves.

Zondacrypto case takes toll on Poland’s stock market

The collapse of Zondacrypto is taking a toll on the Warsaw Stock Exchange (WSE), the Polish newspaper also remarked in its piece.

Affected is NewConnect, the stock market’s platform for smaller, tech-oriented firms, where Femion Technology was listed.

The fintech was a holding company that had little activity outside TryPay, which was licensed as a payment institution by Poland’s Financial Supervision Authority (KNF).

TryPay’s main purpose was to serve as a financial bridge between złoty accounts at Polish banks and the cryptocurrency exchange.

When news came out that the latter was in trouble, TryPay tried to avoid the fallout. It quickly terminated its contract with Zonda’s operator, BB Trade Estonia.

The move did not save it, however, as the exchange was its main partner. And without the payment processor, Femion lost all its revenue, too.

All members of Femion’s supervisory board resigned on the last day of April. The final decision for its dissolution is expected from a meeting in mid-May.

Zonda’s crash – A case of concentration of control and capital

Founded as BitBay in Poland in 2014, the exchange rebranded to Zondacrypto in 2021 and relocated to Estonia. It obtained a license there, but remained focused on the Polish market.

It was reportedly sold to a U.S. investor. However, Gazeta Wyborcza recently unveiled, citing the Polish counterintelligence agency, it may have been controlled by a Russian mafia group.

It eventually became one of the largest coin trading venues in Central and Eastern Europe through active advertising and sponsorship campaigns.

Zonda is now at the heart of a political clash in Warsaw over backing forces opposing a government-proposed crypto bill that has been stopped twice by President Karol Nawrocki.

In his last public statement in April, CEO Przemysław Kral blamed founder Sylwester Suszek, who disappeared in 2022, for never handing over the keys to a wallet holding 4,500 BTC.

Since taking over, Kral had consolidated power and ownership in the group, controlling both the exchange and its payment gateway.

The crypto entrepreneur is now believed to be hiding in Israel, of which he is also a citizen. Bitcoin.pl further commented:

“With such concentration, there is no independent oversight or a true assessment of counterparty risk. The structures were too intertwined for either party to operate with true autonomy.”

Meanwhile, Polish prosecutors launched an investigation into Zondacrypto’s crash after identifying thousands of victims whose combined losses exceeded 350 million złoty (over $95 million).

A recent poll, conducted against the backdrop of the Zonda scandal, showed that more than a third of Poles now support banning crypto trading in their country, which is yet to implement the EU’s latest rules under the Markets in Crypto Assets (MiCA) legislation.

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