Crypto Exchange Zipmex Freezes Customer Withdrawals
Important takeaways
- Zipmex has frozen customer withdrawals citing volatility in the cryptocurrency market.
- The exchange announced the update in a tweet, confirming that withdrawals would be paused “until further notice.”
- Zipmex is one of several firms that have blocked customers from accessing their deposits in recent weeks in response to the market downturn.
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Zipmex announced the update in a Wednesday tweet, saying withdrawals would be paused “until further notice.”
Zipmex stops customer withdrawals
Zipmex has become the latest cryptocurrency firm to resort to drastic measures to deal with the market downturn.
The Asian firm announced on Wednesday that it had halted customer withdrawals due to market volatility and other factors. A tweet from the company’s official account it says:
“Due to a combination of circumstances beyond our control, including volatile market conditions, and the resulting financial difficulties of our key business partners, in order to maintain the integrity of our platform, we will suspend withdrawals until further notice.”
Zipmex bills itself as “Asia’s leading digital asset exchange” and offers clients access to assets such as Bitcoin, Ethereum and its own Zipmex token. According to the Zipmex website, customers can enjoy up to 12% in rewards per year by depositing their money on the platform. For example, the exchange claims to offer 10% annual returns on USDC and 6% on Bitcoin and Ethereum, although it does not clarify how it generates the returns.
The firm raised $11 million in a Series B funding round in March and recently received an investment from Coinbase (the US exchange initially explored a potential acquisition, but the deal fell through).
Zipmex is one of several crypto-focused firms facing challenges in the wake of the market crash. Most cryptoassets have fallen in value during this year, accelerated by key events such as the collapse of Terra and Three Arrows Capital’s liquidity crisis.
As a result, Celsius, Voyager Digital, CoinFLEX, Vauld and Babel Finance have all made similar moves to Zipmex to deal with their own liquidity problems, halting withdrawals as they struggle to raise funds to make their customers whole. Last week, Celsius filed for Chapter 11 bankruptcy in New York. Like Zipmex, the firm promised customers returns that far exceeded traditional banking.
The decision to freeze customer withdrawals is significant as it effectively blocks customers from accessing their funds. Since Zipmex has given no indication of when they plan to reopen withdrawals, other than a note that they have been paused “until further notice,” today’s update is bad news for the exchange’s customers.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
