Zipmex gets 3-month protection in Singapore amid halted withdrawals
Troubled crypto exchange Zipmex has time to come up with a restructuring plan by Dec. 2 after halting withdrawals in July.
Cryptocurrency exchange Zipmex has gotten a chance to sort out liquidity issues as a court in Singapore has granted the firm with more than three months of creditor protection.
Singapore’s High Court has ruled that each of the five Zipmex entities has a moratorium until Dec. 2, 2022, to come up with a restructuring plan, Bloomberg reported on Monday.
The action aims to protect Zipmex from potential creditor lawsuits during the moratorium period after the exchange abruptly halted crypto withdrawals on its platform in mid-July. The cryptocurrency has since resumed partial withdrawals from Zipmex’s trade wallet but is yet to resume all withdrawals.
Zipmex sought creditor protection for a period of six months subsequently after halting withdrawals, filing five moratorium applications on July 27. The exchange cited liquidity issues due to exposure to the cryptocurrency lender Babel Finance, which halted withdrawals in June.
The Thailand-based crypto exchange is not the first crypto firm to receive a moratorium in Singapore. Justice Aedit Abdullah also granted a three-month protection order that would shield Vauld — another local crypto firm that halted withdrawals in early July — from creditors.
According to some reports, Zipmex shareholders and potential investors have urged CEO Marcus Lim to step down over management decisions, which they believe led to the severe cash crunch.
Related: Crypto lending platform Hodlnaut suspends services due to liquidity crisis
Cryptocurrency lending is a type of crypto service that allows borrowers to use their crypto assets as collateral to get loans in fiat currencies like the U.S. dollar or stablecoins like Tether (USDT). The practice allows users to get money without having to sell their coins and repay the loan at a later date.
The crypto lending industry has faced massive liquidity issues amid a major bear market of 2022 as lenders became unable to provide full liquidity on assets that were lent out at the same time. According to some industry observers, crypto lending is still able to survive the crisis but it needs to get rid of the maturity mismatch problem.
