Crypto exchange Zipmex seeks bankruptcy protection in Singapore as crypto crisis spreads

Zipmex has become the latest victim of the ongoing crypto crash after suffering liquidity problems that it blames on troubled crypto lenders Babel Finance and Celsius Network.

The Singapore-based crypto exchange said on Wednesday it had filed moratorium applications in the city-state for five business entities. The moratoriums will protect Zipmex from any legal claims or lawsuits for a period of up to six months, according to a company statement.

The move will give Zipmex the “breathing space and time it requires” to explore options to resolve the liquidity crisis, formulate a restructuring plan and secure additional investment to continue operations, the company said. It has already received interest from several potential investors, Zipmex added, including a memorandum of understanding signed with an undisclosed party that could inject the exchange with what it described as “a large amount of fresh capital”.

Zipmex is owed a net $48 million by Hong Kong-headquartered crypto-lending firm Babel Finance, and another $5 million by Celsius Network, the lender that filed for bankruptcy in New York on July 21. Zipmex said it had decided to take legal action against Babel Finance, but could possibly write off the loss from Celsius Network against its own balance sheet. Zipmex’s exposure to the two firms forced the trading platform to temporarily suspend withdrawals last Thursday.

Meanwhile, Zipmex faces a potential investigation by Thailand’s Securities and Exchange Commission. Finanstilsynet said on Monday it is looking at potential losses from investors following Zipmex’s withdrawal suspension.

Established in 2018, Zipmex offers crypto trading and investment services in Thailand, Indonesia, Singapore and Australia. The company had managed to attract a total of $52 million in investments that included B Capital Group, the investment firm led by Facebook’s billionaire co-founder Eduardo Saverin, Bain Capital veteran Rajarshi Ganguly and legendary investor Howard Morgan. The exchange processed nearly $800,000 worth of spot trades over a 24-hour period from Friday, data from crypto tracker Coingecko shows.