Zipmex Files for Debt Relief in Singapore

Key Insights:

• Zipmex’s solicitors have filed five moratorium applications in Singapore. 
• The company seeks to protect itself against third party actions, claims and proceedings for a period of six months.
• Zipmex has resumed withdrawals from its trade wallet.

Singapore-headquartered Zipmex is seeking bankruptcy protection against legal action from creditors shortly after freezing withdrawals on its platform citing volatile market conditions.

The cryptocurrency exchange has confirmed that its solicitors in Singapore have filed five moratorium applications.

Bankruptcy Protection

Zipmex, which is being represented by lawyers from Morgan Lewis Stamford LLC, has filed for legal authorisation from debtors to postpone payment, under Section 64 of Singapore’s Insolvency, Restructuring and Dissolution Act (IRDA).

IRDA, which came into effect in July 2020, consolidates laws relating to debt restructuring previously found in the Bankruptcy Act and the Companies Act, into a single statue.

In accordance with IRDA, Zipmex seeks to protect itself against third party actions, claims and proceedings for a period of six months while the filing is active.

Under the nation’s laws, this filing provides Zipmex with automatic protection from the continuation or commencement of proceedings by claimants for 30 days, or at least until after a Singapore court makes its final decision.

Additionally, it has been revealed that the company already filed for credit relief on July 22. All of its subsidiary entities, consisting of Zipmex Asia Pte Lt, Zipmex Pte Ltd, Zipmex Company Limited, PT Zipmex Exchange Indonesia and Zipmex Australia Pty Ltd, were included in the filing.

Resumed Withdrawals

Despite halting withdrawals last week due to the “resulting financial difficulties” of their key business partners, Zipmex has resumed withdrawals from its trade wallet but said transfers, deposits and trade will continue to be disabled from its Z Wallet.

The company reportedly had $100 million in exposure to crypto lender Babel Finance, which was at risk of default and this has been large factor in causing its financial woes.

Last month, Babel Finance halted withdrawals and redemptions citing unusual liquidity pressures. By the end of last year, the company had an outstanding loan balance of $3 billion, up from $2 billion the previous February.

What’s more, Coinbase made an offer to acquire Zipmex earlier this year but the acquisition fell through and instead, a strategic investment was made in the company. Although the amount of investment has not been disclosed, the firm confirmed that Coinbase opted out of the acquisition due to the bear market.