The former chief executive of Germany's scandal-hit payments provider Wirecard has been released on bail following his arrest late on Monday evening.
Markus Braun, who resigned as CEO on Friday, turned himself in shortly after an arrest warrant was issued by prosecutors in Munich.
Investigations have been focused on €1.9 billion that auditors Ernst & Young said last week were missing from the firm's accounts. Wirecard said on Monday there was a likelihood that the money did not exist.
Braun has been arrested on suspicion of incorrect statements of data and market manipulation.
Prosecutors said in a statement that he is accused of inflating the company's balance sheet and revenue, "possibly in collaboration with further perpetrators", in order to "portray the company as financially stronger and more attractive for investors and clients".
The former CEO left a Munich detention centre on Tuesday after posting €5 million in bail. He will have to report to police weekly.
The search for the missing billions hit a dead end on Sunday after two Philippine banks that were said to hold the money in escrow accounts (where a third party receives and disburses money) said that they had no dealings with Wirecard.
"The Management Board of Wirecard assesses on the basis of further examination that there is a prevailing likelihood that the bank trust account balances in the amount of 1.9 billion EUR do not exist," a statement from Wirecast said on Monday.
Wirecard was once regarded as a darling of the growing financial technology sector and had stretched its presence to Asia and North America.
But the company became the subject of multiple Financial Times reports about accounting irregularities in its Asian operations. Wirecard disputes the reports, which date back to February 2019.
On Monday, shares dived as much as 44.9% in afternoon Frankfurt trading after news broke of the financial black hole.
Moody’s Investors Service on Monday withdrew Wirecard’s ratings, saying that “it believes it has insufficient or otherwise inadequate information to support the maintenance of the ratings.”
To keep the business afloat, Wirecard said it was continuing “constructive discussions” with banks on maintaining credit lines, and is “assessing options for a sustainable financing strategy for the company.”
The firm said it was also examining measures to restructure and dispose of business units.