Financially embattled digital currency exchange Zipmex is looking to buy time to sort out its liquidity problems. The Singapore-based firm has filed for its various subsidiaries to be granted a moratorium on bankruptcy under Section 64 of Singapore’s Insolvency, Restructuring and Dissolution Act 2018.
Zipmex explains in a notice with users that the application does not imply the liquidation of any entities. Rather, it helps protect the company against third-party actions, claims, and proceeding while the team actively tries to resolve the liquidity situation.
“The moratoriums would give the Zipmex Group the breathing space and time it requires to explore options to resolve the liquidity situation (including to pursue the recovery against Babel Finance), and to formulate a restructuring plan and secure additional investment to secure the Zipmex Group’s operations moving forward,” it said.
With the filing, Zipmex has been granted a temporary automatic moratorium. This will last for 30 days or until a court decides on the application. If the application is approved, it could buy the exchange up to 6 months of grace period in which creditors cannot take action against it.
Entities the filing protects are Zipmex Asia Pte Ltd, Zipmex Pte Ltd, Zipmex Company Limited (incorporated in Thailand), PT Zipmex Exchange Indonesia (incorporated in Indonesia), and Zipmex Australia Pty Ltd (incorporated in Australia). The notice adds that interested creditors can reach out to attend the case conference.
The Zipmex saga
Zipmex recently suspended all withdrawals from its platform, stating that it had encountered financial issues with “key business partners.” It later revealed these issues to be $48 million and $5 million exposure to Babel Finance and Celsius, respectively.
The exchange has since resumed some withdrawals, although withdrawals from Z Wallet, its main wallet where users’ funds are held, are still suspended. The company also shared a Twitter that it was in talks with potential investors.
📢 Important Announcement 📢
Our conversations with various interested parties have progressed significantly. One of those parties has offered terms in an MOU which includes confidentiality obligations so as to be able to commence Due Diligence. #zipmex— ZIPMEX (@zipmex) July 24, 2022
Meanwhile, the Thai Securities and Exchange Commission (SEC) has opened a probe into the activities of the exchange. The regulator has requested Zipmex to submit an audit of its accounts and also opened an online complaint form for users affected by the withdrawal suspension.
Zipmex is only one of the many digital assets firms that have run into financial troubles amidst the bear market. Several platforms, including Voyager, CoinFLEX, Celsius, and Babel, have suspended withdrawals. Of this cohort, Voyager and Celsius, joined by Three Arrows Capital, have filed for bankruptcy.
A less extreme action some firms have taken to cope with the market downturn is to cut down their employee headcount. Firms including Coinbase (NASDAQ: COIN), Gemini, and Robinhood (NASDAQ: HOOD) have gone this route.
Watch: The BSV Global Blockchain Convention panel, The Future of Digital Asset Exchanges & Investment
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
