Singapore-based cryptocurrency exchange Zipmex has become the latest victim of the crypto market crash, pausing all trading and withdrawals since July 20. The company has now filed for bankruptcy protection for relief.
Zipmex’s lawyers in Singapore, Morgan Lewis Stamford LLC, have filed five moratorium applications under section 64 of Singapore’s Insolvency, Restructuring and Dissolution Act 2018, seeking prohibition on any third-party cases against the firm for six months.
Last week, Zipmex CEO and co-founder Marcus Lim denied that the firm was facing any financial troubles, although its troubles have been brewing since May, when the stablecoin TerraUSD (USTC) and cryptocurrency LUNA crashed, wiping out around $200 billion from the market.
The crash led to the fall of Singapore-based crypto hedge fund Three Arrows Capital, and crypto lending firms Babel Finance, Voyager, and Celsius Network. All the firms have filed for bankruptcy.
Zipmex told its users that its bankruptcy protection application would help protect the firm “against third-party actions, claims, and proceedings while it is active”, and enable “the team to focus on resolving the liquidity situation, without having to worry about defending potential claims or adverse actions while we are doing so”.
The firm last week halted customer withdrawals in Indonesia, Australia, and Singapore, citing “circumstances beyond our control, including volatile market conditions, and the resulting financial difficulties of our key business partners.”
However, the company’s trade wallet and the NFT platform have now resumed operations. But withdrawals from the Z Wallet, which is the main wallet in which customers have stored their cryptos, remain frozen.
Zipmex’s problems escalated last month after the collapse of the Hong Kong-based crypto lender Babel Finance, which defaulted on a $100 million loan. Babel halted customer withdrawals when Three Arrows and Celsius Network became insolvent.
Zipmex claims that the moratorium will give them the time to look for investment offers.
Meanwhile, Thailand’s Securities and Exchange Commission (SEC) has started action against the crypto exchange, which also has an office in Bangkok, stating that they want to gather clear and factual information directly from the affected customers to build up the case, and is also working with the law enforcement agencies to look into the potential losses.
They’ve asked the affected investors to register complaints against the firm on its official website.