Wirecard's former CEO, Markus Braun, has been arrested, accused of inflating the company's balance sheet in an accounting scandal, centering on a missing sum of 1.9 billion euros ($2.1 billion), prosecutors in Munich said on Tuesday.

The saga has gathered pace in recent days. Braun resigned on Friday after the German company disclosed that auditors couldn't find accounts containing the money. Then on Monday, Wirecard said it had concluded the money probably doesn't exist.

Prosecutors said a court issued an arrest warrant following the news, and Braun turned himself in on Monday evening. He was arrested on suspicion of incorrect statements of data and market manipulation.

Austria-born Braun is accused of inflating the company's balance sheet and revenue using bogus income from business with third-party acquirers. Prosecutors wrote that this was done "possibly in collaboration with further perpetrators," in order to "portray the company as financially stronger and more attractive for investors and clients."

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Wirecard was once regarded as a star of the growing financial technology sector, but its shares have fallen sharply after the company became the subject of multiple Financial Times reports about accounting irregularities in its Asian operations. 

Wirecard disputed the reports, the first of which were published in February 2019, and said it was the victim of speculators.

On Monday the company announced the firing of its chief operating officer, Jan Marsalek, who had been suspended from the management board last week. German news agency dpa reported that Marsalek had been in charge of overseeing daily operations including in Southeast Asia, where the possible fraud occurred.

Two banks in the Philippines, which reportedly held the money in escrow accounts, said in recent days that they had no dealings with Wirecard and the country's central bank chief said none of the missing money entered the Philippines' financial system.

In the early hours of Monday, Wirecard said its management board "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 euros do not exist."

Earlier in the week, Germany's finance minister, Olaf Scholz, dismissed any notion that the country's regulators failed to monitor the bank. "I think the supervisory institutions worked very hard and they did their job – this is what we see today," Scholz, told a finance conference in Frankfurt via videolink.

Wirecard said it is in "constructive discussions" with banks on continuing credit lines, and is "assessing options for a sustainable financing strategy for the company." It said it is examining other possible measures to keep the business going, including restructuring and disposing of business units.

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