Crypto exchange Zipmex files for bankruptcy protection in Singapore
Exchanges’ solicitors filed five moratorium applications under Singapore’s Insolvency Act
The crypto exchange Zipmex has announced that it has filed for bankruptcy protection in Singapore to stem the legal threat from creditors.
On 22 July 2022, Zipmex solicitors Morgan Lewis Stamford filed five applications under Section 64 of Singapore’s Insolvency, Restructuring and Dissolution Act 2018 on behalf of the Singapore-based Group’s entities.
The five entities are Zipmex Asia Pte Ltd, Zipmex Pte Ltd, Zipmex Company Limited (incorporated in Thailand), PT Zipmex Exchange Indonesia (incorporated in Indonesia) and Zipmex Australia Pty Ltd (incorporated in Australia).
Zipmex is seeking moratoriums “to prohibit and restrain the commencement or continuation of proceedings against the companies for a period of up to six months”.
Singapore law dictates such a filing automatically grants respite for either 30 days or until a Singapore court decides on the application, whichever is earlier.
A day long suspension
On 20 July Zipmex suspended users from withdrawing their cryptos and funds from the platform. In an announcement made via Twitter, the company said that the decision was driven by “a combination of circumstances” beyond its control. This included “volatile market conditions” and “a series of black swan events in the industry” that resulted in financial difficulties for its key business partners.
Zipmex apologised to its users and argued that this move would help maintain the integrity of its platform. The firm added: “At Zipmex, the security of our customers is our number one priority. As such, we strive to provide the most secure platform possible.”
The next day, 21 July, Zipmex said withdrawals had resumed from its trade wallet, but transfers from its ZWallet to the trade wallet were still not available.
Space to pursue Babel Finance
Zipmex also said the moratoriums would give it “breathing space and [the] time it requires to resolve the liquidity situation, including to pursue the recovery against Babel Finance, and to formulate a restructuring plan and secure additional investment”.
Crypto lender Babel Finance had suspended its withdrawals and redemptions in June. Last week, Zipmex acknowledged that as of 21 July it had an exposure of $48m (£39m) to Babel Finance.