Thailand regulator probes Zipmex over alleged unregistered earn program

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Thailand’s Securities and Exchange Commission (SEC) has opened a new investigation into the activities of local digital currency exchange Zipmex relating to its earn program.

The securities watchdog penned a letter to Zipmex to clarify how its ZipUp/ZipUp+ offerings were administered. The letter, addressed to Zipmex’s CEO Akalarp Yimwilai, suggested that the digital currency exchange may have infringed certain provisions of Thailand’s securities laws.

According to the SEC’s regulations, virtual currency service providers seeking to offer returns to customers on digital asset deposits will have to obtain approval from the country’s Ministry of Finance. The SEC claimed that the ZipUp funds were run by Babel Finance, a firm in dire financial straits, with the regulator urging Zipmex to respond to its letter.

“In case of failure to deliver within such specified time, the SEC would deem that you do not wish to clarify and will proceed with further actions as deemed appropriate accordingly,” the SEC’s letter read.

Zipmex had previously offered an in-depth operation into the operations of the “Earn” program in a memo given to V Ventures, one of its leading investment partners. According to the memo, Zipmex confirmed that it had dipped into customers’ funds “and part of the proceeds received was used to pay the bonuses under the ZipUp program.”

Zipmex’s original plan was to make use of marketing funds in making bonus payments, but the exchange’s Chief Marketing Officer Proud Limpongpan stated that the marketing arm of the company has no relationship with the ZipUp offering.

“Any inferences made to supposed internal documents are therefore inaccurate, have been taken out of context, and seem to have been illegally retrieved for the purpose of slander,” she said.

Zipmex not out of the woods yet

The new investigation by the SEC is considered a huge blow for the exchange that has gone through a torrid patch in 2022. Zipmex was blighted by massive exposure to Babel Finance and Celsius, forcing it to halt withdrawals for customers and put a cap on the rest of its operations.

The company filed and obtained a moratorium to prevent creditors from instituting legal action against it as it tries to put its house in order. Zipmex filed for an extension of the moratorium on November 18 amid talks with regulators for a potential recovery plan.

Zipmex is grappling with a police investigation in which regulators claim that the exchange did not completely disclose compliance processes in violation of section 75 of the Digital Assets Act.

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