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Zipmex Seeks Temporary Protection to Shield Against Creditors
Days after halting withdrawals, Thailand-based crypto exchange platform Zipmex has now filed for a moratorium protection.
The filing makes the exchange the latest in a series of failing platforms seeking court protection from their creditors.
Zipmex Freezes Withdrawals, Files for Extra Time
About a week ago, Zipmex shared the news that it was freezing user withdrawals “until further notice.” At the time, the platform cited unstable market conditions and financial difficulties with a few partner companies. They promised that a resolution to the liquidity problems was in the works and that trading would be back online shortly.
However, things seem to have taken an unexpected turn. Yesterday, the Zipmex team released an official announcement to the platform’s user base, the “Zipsters.” The team first revealed that they submitted multiple moratorium applications last Friday for Zipmex and all its subsidiaries.
As we continue to work towards resolving our liquidity situation…last Friday, we submitted moratorium applications in Singapore for all Zipmex entities.”
These platforms include Zipmex Asia Pte Ltd, Zipmex Pte Ltd, Zipmex Company Limited, PT Zipmex Exchange Indonesia, and Zipmex Australia Pty Ltd. The moratorium applications notably fall beneath section 64 of Singapore’s Insolvency, Restructuring and Dissolution Act 2018.
Buying Time
A “moratorium” in a legal context simply means the temporary delay or suspension of a certain activity. In this case, what does Zipmex’s latest action mean for the exchange?
By filing for a moratorium, as a debtor, Zipmex has gained shielding against legal proceedings from its claimants. This means Singapore’s laws will grant the exchange immunity for a month or until a court decides on the applications. If approved, Zipmex’s moratorium protection could last six months.
In the meantime, however, Zipmex can focus on dealing with its liquidity problems. This way the team does not have to worry about potential third-party actions, claims, and proceedings. This is only as long as the moratorium remains operational.
Likewise, the exchange noted there haven’t been major improvements since they made their last announcement. At the time, the platform was under the scrutiny of the Thailand Securities and Exchange Commission. The regulators were probing into the causes of the frozen withdrawals. They also questioned whether Zipmex had exposure to crypto platforms Babel Finance and Celsius, both in hot water.
Zipmex Under SEC Scrutiny
The crypto exchange reportedly has $48 and $5 million exposure to Babel and Celsius, respectively. However, with time gained from the recent filing, Zipmex aims to put together a strategy to restructure itself. It is also pursuing funds to aid operations in the future.
Supposedly, Zipmex has contacted potential investors and a deal might be in the works. Regardless, the SEC is continuing its investigation and looking into users who may have lost funds in the aftermath of its collapse.
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In contrast, while withdrawals from Zipmex’s Z wallets are still not available, other features are now back online. This means Zipmex’s Z wallets and NFT platform are now live once more. Zipmex says it has no plans to halt either of those services any time soon.
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