Troubled Crypto Exchange Zipmex Wants Bankruptcy Protection
Southeast Asian cryptocurrency exchange Zipmex submitted several moratorium applications under Section 64 of Singapore’s Insolvency, Restructuring and Dissolution Act 2018 last Friday on behalf of five of its entities, the company announced today.
Zipmex Files for Moratorium Relief
Moratorium relief protects debtors from legal action by creditors for a certain period. The time-out period gives the debtor more time to think about their options, such as filing for bankruptcy, a trust deed, or a debt arrangement scheme.
In its official announcement, Zipmex said it is seeking protection from its creditors’ claims and proceedings for up to six months. The company noted that the debt relief period would help its team focus on resolving its liquidity issues, adding that it plans to continue serving customers.
“This helps protect Zipmex against third-party actions, claims, and proceedings while it is active, and enables the team to focus all our efforts on resolving the liquidity situation, without having to worry about defending potential claims or adverse actions while we are doing so,” the exchange said.
Meanwhile, Thailand’s Securities and Exchange Commission (SEC) has reportedly sent a letter to Zipmex, demanding that the company clarify its reasons for applying for moratorium relief in a Singapore court. The regulator also wants creditors to exercise their right to attend the hearing on 29 July 2022.
Zipmex’s troubles started when the exchange abruptly halted withdrawal services on July 20 due to market volatility and financial problems with its business partners. Although the firm resumed withdrawals that same day, it came under the radar of Thailand’s SEC.
Following the withdrawal suspension, the regulator demanded to know why the exchange had paused some services and whether it had exposure to troubled crypto lenders Celsius and Babel Finance.
In response, Zipmex revealed that it had $48 million and $5 million exposure to Babel and Celsius, respectively. The exchange said it intends to write off Celsius’s debt and pursue recovery from Babel.
Meanwhile, Zipmex recently announced that it is in talks with interested parties regarding a possible deal to help solve its liquidity problems. But that has not stopped the SEC from gathering information from customers who recorded losses due to the company’s actions.