Zipmex crypto exchange has said it will resume withdrawals less than 24 hours after suspending operations due to its financial exposure to Celsius and Babel Finance.
Zipmex, a cryptocurrency exchange operating in Singapore and Thailand, had said that it would temporarily pause withdrawals of clients’ funds from the platform. The exchange blamed falling prices of crypto assets and loan defaults from the industry’s big players.
However, Zipmex said it was in talks with Babel Finance, which suspended withdrawals in June, to resolve its $48 million exposure to the crypto services firm, while a Babel Finance spokesperson said it was actively working with Zipmex to avoid customer losses, reported Reuters.
The troubled exchange had stated the earlier suspension of operations was due to issues beyond their control, including “volatile market conditions” and the financial difficulties of key business partners, reported Bloomberg.
Akalarp Yimwilai, CEO of Zipmex revealed on YouTube that the firm was in talks with investors to raise funds in a bid to resume normal operations.
Yimwilai revealed via live stream that Zipmex had large exposures to both Babel Finance and Celsius, lenders that have filed for restructuring or bankruptcy.
Zipmax has now said it would write off its $5 million exposure to Celsius.
“Zipmex is exploring all available channels including fund-raising, legal action and restructuring,” the company said in a statement.
No protection for users
Zipmex operates a range of digital products for its customers including ZipUp+ which offers a 10% return on Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC) deposits.
“This means that you will not be able to recover all the money or DPTs [digital payment tokens] you paid to Zipmex if Zipmex’s business fails,” read the notice. The firm is not licensed by the Monetary Authority of Singapore (MAS) with the regulator not issuing any comments since the announcement.
Zipmex operates in Singapore under an exempted payment service provider permit, but in Thailand, the exchange was issued with a license by the Securities and Exchange Commission of Thailand for digital asset trading. Thailand’s regulator has asked Zipmex to write to it explaining the situation, with Yimwilai stating that the firm had done so.
A long string of troubled crypto firms
Zipmex is just one in a growing line of crypto exchanges facing a liquidity crunch. In the last 30 days, a handful of firms had paused withdrawals for their customers in a bid to survive the chilling crypto winter.
Celsius was the first to make the announcement and in no time, Voyager Digital, Babel Finance, Vauld, and CoinFlex followed suit. Each of the firms cited unfavorable market conditions that were triggered by Terra’s implosion and Three Arrows Capital (3AC) defaulting on its loans.
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