Financially beleaguered digital currency exchange Zipmex is looking to buy time to address its liquidity issues. The Singapore-based company has applied to its various subsidiaries for a bankruptcy moratorium under Section 64 of the Singapore Insolvency, Restructuring and Dissolution Act 2018.
Zipmex explains in a to remark with users that the application does not involve the liquidation of any entity. On the contrary, it helps protect the business from third party actions, claims and proceedings while the team actively attempts to resolve the liquidity situation.
“The moratoriums would give the Zipmex Group the breathing space and time it needs to explore options to resolve the liquidity situation (including to pursue the turnaround against Babel Finance), and to formulate a restructuring plan and secure additional investments. to secure the operations of the Zipmex Group moving forward,” he said.
Along with the filing, Zipmex was granted a temporary automatic moratorium. This will last 30 days or until a court rules on the claim. If the application is approved, she could buy the exchange for up to 6 months of grace period during which creditors cannot sue her.
The entities protected by the filing 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). The notice adds that interested creditors may contact to attend the case conference.
The Zipmex saga
Zipmex recently suspended all withdrawals from its platform, saying it encountered financial problems with “key trading partners”. He then revealed that these issues accounted for $48 million and $5 million of exposure to Babel Finance and Celsius, respectively.
The exchange has since resumed some withdrawals, although withdrawals from Z Wallet, its main wallet where user funds are held, are still suspended. The company also shared a Twitter saying it was in talks with potential investors.
📢 Important Announcement 📢
Our conversations with various interested parties have progressed considerably. One of these parties has proposed terms in a memorandum of understanding that include confidentiality obligations so that due diligence can be undertaken. #zipmex
– ZIPMEX (@zipmex) July 24, 2022
Meanwhile, the Thai Securities and Exchange Commission (SEC) has opened an investigation into the activities of the exchange. The regulator asked Zipmex to submit an audit of its accounts and also opened an online complaint form for users affected by the withdrawal suspension.
Zipmex is just one of many digital asset companies that have run into financial trouble amid the bear market. Several platforms, including Voyager, CoinFLEX, Celsius and Babel, have suspended withdrawals. Of this cohort, Voyager and Celsius, joined by Three Arrows Capital, filed for bankruptcy.
A less extreme measure some companies have taken to deal with the market downturn is to downsize. Companies including Coinbase (NASDAQ: PIECE OF MONEY), Gemini and Robinhood (NASDAQ: HOOD) have taken this route.
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