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Fraud by Design

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April 15, 2025

Background

Bitpanda was founded in Vienna in 2014 by Christian Trummer, Paul Klanschek, and Eric Demuth. Since then, the fintech has become a major crypto broker with around 700 employees and offices in places like Amsterdam, Berlin, and Madrid.

Arrogance

In 2022, Bitpanda burned through the last of the over €500 million raised in early funding rounds. Revenue had dropped by 80%, and the company reported a net loss of more than €100 million1. Bitpanda was close to bankruptcy. It was only saved by fresh money, mostly from Citi and JPMorgan.

Just one year later, in 2023, the management celebrated a “return to profitability,” with a net profit of €13 million2. After burning roughly €700 million in total, that result probably didn’t impress the investors much. Newer data has not been published yet, but it seems that 2024 net profit has surged to €60 million3. Anyway, such generally positive performance wouldn’t be thanks to management performance – it was thanks to Bitcoin. The crypto coin reached a new all-time high of over $100,000 in summer/ fall 2024, creating FOMO4 among retail investors, many of whom opened accounts with the first crypto broker they could find. Bitpanda benefitted from this wave. Account openings surged to 113% compared to 2023, trades even jumped by 223%5

In early 2025, Bitcoin price started to drop again, falling to below $60,000 and now is trading just above $70,000. Since February 2025, Bitpanda has stopped talking about how “great” the new year will be.

Going Public in the Middle of Uncertainty

So what do you do when the outlook darkens? Right – you prepare for an IPO. Bitpanda wants to raise a mysterious €3.7 billion6. With last known results that would imply a price-to-earnings ratio of 272. Even Nvidia would look cheap in comparison.

The numbers do not add up, but they match well with the company’s culture – shaped by arrogance and a lack of respect.

Political Donations

It also fits that Bitpanda, just after its supposed return to profitability, jumped into German politics. The company donated €500k + €250k to CDU/CSU, and €500k each to SPD and FDP7. So more than 10% of 2023’s net profit was spent on political donations. One might ask – what kind of return are they expecting from this in Vienna?

Maybe this explains why German regulators remain so silent about Bitpanda’s local custody entities.

Poor Service and Questionable Data Practices

Bitpanda’s customer service tells the same story. There is no phone support, only email. Most emails are answered with generic templates like: “We kindly inform you that, as a regulated company, we are required to take certain steps to ensure the safety of users on the Bitpanda platform”. It’s likely that most requests are handled by chatbots, whose job seems to be to delay and distract rather than help. One might call it a filibuster-service.

And if a human does take over your case, things often get worse.

Many customer complaints are about blocked transfers – either crypto transfers to external wallets or fiat withdrawals to bank accounts. Bitpanda refuses to process these transactions, claiming they want to protect the customer – even if the customer doesn’t want this protection.

Once customers understand that Bitpanda controls their money, they often agree to provide the information Bitpanda demands. This is the beginning of an intrusive and privacy-violating process, supposedly justified by “regulatory requirements.”

The process includes a full re-verification, answering detailed questions about one’s personal life, financial situation, and more. In some cases, Bitpanda asks for absurd things: screenshots of hot wallets, photos of cold wallet hardware, or selfies holding handwritten notes releasing Bitpanda from any liability.

Fulfilling this wish list does not solve the original problem. In most cases, it becomes clear: Bitpanda never planned to give customers access to their money again.

The company knows that legal action is usually more expensive than the damage itself. And if someone still pushes back, Bitpanda threatens them with lawsuits for defamation. So most disputes are settled quietly and never surface to the public.

Breach of Trust and Misuse of Custody

In its customer agreements, Bitpanda describes custody as a fiduciary service. Normally, this means that an independent custodian holds the assets for the benefit of the client. But in Bitpanda’s case, they act as their own custodian. This lets them ignore customer instructions.

Transfers to external wallets often don’t happen – not only breaking the contract, but also violating the client’s position as the legal owner of the asset.

Lack of Regulatory Transparency

It’s unclear if Bitpanda’s custody unit meets its regulatory reporting obligations under MiCAR – before or after entering into a contract. There is no visible custody strategy or risk management.

Broken Segregation Principle

Bitpanda pools all customer assets in one omnibus wallet. In this model, client assets must never be mixed with company funds. But this rule is already broken.

According to the terms and conditions, customers assign earnings from “staking” to Bitpanda. These staking revenues are generated by lending crypto and receiving more back. However, instead of giving this extra value to the customer, Bitpanda books it into its own portfolio.

This breaks the segregation principle. In case of insolvency – the situation that this principle is supposed to protect against – customer assets cannot be separated. They would fall into the insolvency estate and go to creditors. This violates Articles 70 and 75 of MiCAR (EU Regulation 2023/1114).

Suspected Investment Fraud

There are strong indications that Bitpanda does not store customer assets properly – specifically, that the crypto shown in customer portfolios is not always backed by actual tokens on the blockchain.

In other words: Bitpanda books the crypto purchase internally (minus high fees and spreads), but never executes the actual transaction on-chain. So while Bitpanda keeps the customer’s cash, the customer only gets a virtual position.

This explains why the coins show up instantly – they were never bought.

Instead of putting the crypto in a segregated fiduciary account, Bitpanda seems to use the cash for its own business. Selling crypto on their own platform isn’t a problem – the money just gets moved between customers, while Bitpanda earns fees for trades it may never execute.

But external transfers are a different story. To transfer coins to an external wallet, Bitpanda must actually own them. This can be a problem if they don’t have enough liquidity – or if the market price has gone up. Bitpanda may be forced to buy the coins at a higher price than they were sold for.

The same applies to cash withdrawals. This is likely the reason why Bitpanda blocks both.

  1. https://financefwd.com/de/bitpanda-zahlen-2022/
  2. https://paymentandbanking.com/bitpanda-mehr-als-140-millionen-euro-umsatz-und-zweistelliger-millionengewinn/
  3. https://paymentandbanking.com/bitpanda-mehr-als-140-millionen-euro-umsatz-und-zweistelliger-millionengewinn/
  4. Fear Of Missing Out
  5. https://blog.bitpanda.com/de/jahresbericht-bitpanda-technology-solutions-ein-jahr-des-wachstums-und-der-expansion
  6. https://www.fondsprofessionell.de/news/unternehmen/headline/bitpanda-prueft-boersengang-oder-verkauf-236666/
  7. https://www.capital.de/wirtschaft-politik/krypto-broker-bitpanda-greift-mit-millionenspenden-in-wahlkampf-ein-35383472.html

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