After weeks of rumors, cryptocurrency exchange Zipmex said that it had filed for bankruptcy protection in Singapore in response to mounting legal threats from creditors.
The Thailand-based crypto exchange is reported to have more than $50 million in exposure to Babel Finance and Celsius, crypto lenders that have severely been battered from the turmoil plaguing the crypto markets.
Babel halted withdrawals at the middle of last month in response to liquidity pressures caused by overleveraged crypto businesses such Three Arrows Capital and Celsius Network.
Request For Suspension Relief
Reports have it that Zipmex has requested for suspension relief for five of its firms until future consideration warrants lifting the moratorium as the company looks to resolve its liquidity issues.
The exchange explains:
“This protects Zipmex against third-party lawsuits, claims, and procedures while it is in effect, allowing the team to focus on resolving the liquidity crisis without having to defend prospective claims or unfavorable actions.”
Under Singapore law, such a petition automatically allows companies a 30-day moratorium, or until a Singapore court rules on the case, whichever comes first.
Zipmex stated that it will keep operating its Trade Wallet, NFT platform, and other products, so consumers should not anticipate any service delays — or, at least, not yet.
As a result of the bear market’s cascading effect, several crypto-related companies will adopt a more cautious strategy moving forward.
The cryptocurrency market has seen similar difficulties in the past, but at the current level of adoption and scale, it is very unpleasant for the market.
SEC: File Complaint Vs. Zipmex
By some counts, Singapore’s aggressive cryptocurrency industry, the largest in Asia-Pacific, has been rattled by the recent failure of crypto funds Three Arrows and Celsius.
Money coming into the market has been volatile as a result of all the upheaval. This week, industry intelligence platform CB Insights revealed that venture capital funding for blockchain and cryptocurrency start-ups fell by more than a quarter, to $6.6 billion, in the first half of 2022.
This week, Zipmex said that it had received an investment proposal from an interested entity, with parameters outlined in a memorandum of understanding (MOU) permitting the company to begin due diligence.
Meanwhile, the Securities and Exchange Commission of Thailand is requesting that impacted investors lodge complaints against the company on its website.
Crypto total market cap at $1.08 trillion on the daily chart | Source: TradingView.com
Featured image from Corporate Finance Institute, chart from TradingView.com