Zipmex has become the latest digital asset firm to file for and attain creditor protection following its collapse. The exchange was granted over three months of protection by a Singaporean court, just weeks after Vauld, yet another collapsed digital asset firm that was granted similar protection by the city-state.
The cracks in Zipmex became apparent in July when it announced that it was suspending withdrawals. As CoinGeek reported, the Singaporean exchange blamed its predicament on “volatile market conditions and financial difficulties of our key business partners.” It later revealed that it had lent money to Celsius and Babel Finance, two digital asset lenders that collapsed this year.
Two weeks ago, Zipmex filed a moratorium on bankruptcy for its various subsidiaries under Section 64 of Singapore’s Insolvency, Restructuring and Dissolution Act 2018.
Now, Singapore’s High Court has granted creditor protection to each of the five subsidiaries, giving them some breathing room to sort out their liquidity crises. While the firm had applied for protection for five months, Justice Aedit Abdullah only extended the protection to December 2, giving the firm just under four months to put its house in order.
Justice Abdullah further ruled that a creditors committee needs to be composed and engaged in the process, and a town hall for the creditors should also be held.
Zipmex operated two types of accounts—Z and Trade. The former allowed users to stake their digital assets via its ZipUp+ feature and earn interest as high as 10%. Users on its Trade accounts had access to its trading platform and could deposit and withdraw at will.
After initially halting all withdrawals, Zipmex has since reopened the feature in a limited mode. For those who had been staking, it has transferred their assets to their Trade accounts for withdrawal, but only assets it hadn’t lent out to other lenders.
Zipmex was one of the several victims of the collapse of the digital asset lending industry. It had lent $5 million to Celsius, a lender that filed for Chapter 11 bankruptcy amid accusations of CEO Alex Mashinsky being reckless with user funds. Financial Times recently reported that in the three months before Celsius collapsed, Mashinsky took over the lender’s books and was directly dictating trading strategy. In January alone, he lost $50 million.
Zipmex had lent the most money to Babel Finance, a lender that lost $280 million in highly risky trades. Of this, $48 million belonged to Zipmex and played the most prominent part in the Singaporean exchange’s downfall.
Zipmex investors call for CEO’s blood, cite loss of trust
After seeing the exchange run to the ground, Zipmex shareholders have lost trust in CEO Marcus Lim and are calling for his resignation.
According to a Bloomberg report, one large investor in the exchange has written to the CEO, asking him to step down. In his letter, the investor pointed to the exchange’s entanglement with Babel Finance as the key reason for investors’ loss of trust in Lim’s leadership. It’s not yet clear how many other investors are in support of the call for Lim’s resignation.
While he acknowledged the call to step down, Lim claimed he is focusing on getting the exchange back on its feet. On this front, the exchange is reportedly in talks with several investors for a cash infusion. However, sources say that some investors interested in bailing the exchange out have demanded that Lim quit first.
“The internal matter of senior executive positions (including responses to this letter) is being handled by the board and shareholders. We will be dealing with this privately and after we have resolved the operational issues,” the CEO told Bloomberg.
The call for Lim’s resignation will be one of the issues being discussed in a general meeting scheduled for this week. However, pushing him out will not be easy since he owns about 25% of the exchange.
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