Cryptocurrency exchange Zipmex froze withdrawals, becoming the latest player caught in the fallout from a series of defaults in the digital asset universe.
Zipmex becomes latest crypto exchange to block withdrawals
The company cited “volatile market conditions” and its exposure to troubled crypto lenders Babel Finance and Celsius for its liquidity crisis on Wednesday announcement. The Thai Securities and Exchange Commission has since requested this clarifications of Zipmex’s deposited funds, and the company disclosed in a statement Thursday that it loaned $48 million to Babel Finance and $5 million to Celsius.
“Zipmex is part of the fallout from the crypto contagion,” said Bobby Ong, co-founder of cryptocurrency data aggregator CoinGecko, “The insolvency of their counterparty has resulted in Zipmex being unable to meet its obligations to its depositors.”
Zipmex said it was working with the two firms to navigate the options. “Our exposure to Celsius was minimal, as such, we intended to write this off against our own balance sheet,” the company said on Thursday. Earlier, Zipmex Thailand CEO Akalarp Yimwilai said in a since-deleted YouTube video that it was in talks with investors for a potential bailout, Bloomberg reported.
Among Zipmex’s products is ZipUp+, which gives a whopping 10 percent return on crypto deposits. The service is temporarily stopped. Zipmex’s trading wallet, which customers use store funds to trade, resumed withdrawal functionality on Thursday, but trading remained unavailable.
Cryptocurrency values have tumbled this year — bitcoin is trading near $23,130, down nearly 50 percent this year — wreaking havoc on the sector. Hong Kong-based Babel halted withdrawals last month due to “unusual liquidity pressures.”
New Jersey-based lender Celsius filed for bankruptcy in July after halting withdrawals for more than a month, with court documents revealing a $1.2 billion hole in the company’s balance sheet. The filing dims hopes that many depositors will be made whole — most retail investors are considered unsecured creditors in a bankruptcy and generally near the back of the line when it comes to being repaid. In addition, legal experts say it could take years for the process to get underway.
Three Arrows Capital, a multi-billion dollar crypto hedge fund based in Singapore, fell into liquidation following high-profile defaults. The fund filed for bankruptcy in July, but a subsequent hearing revealed that the physical whereabouts of the company’s two founders were unknown. A federal judge decided to freeze the remaining assets in the United States during the hearing.
In early July, Singapore-based exchange platform Vauld announced a suspension of all withdrawals, trading and deposits for its 800,000 members. Fellow lender, London-based Nexo, was in talks to buy as much as 100 percent of Vauld.
Then there was the fall of Terra’s stablecoin in May, which cost investors $60 billion and precipitated the Celsius liquidity crisis.
Regulars take notice. In Singapore, the government recently announced plans to strengthen the Financial Services Agency’s oversight of the industry due to the turmoil in the Southeast Asian crypto market.
