Zipmex has become the latest digital asset firm to seek and obtain creditor protection after its collapse. The exchange was granted more than three months of protection by a Singaporean court, just weeks after another collapsed digital asset company, Vauld, won similar protection from the city-state.
Zipmex’s cracks became apparent in July when it announced it was suspending withdrawals. As CoinGeek reported, the Singaporean exchange blamed its predicament on “volatile market conditions and financial difficulties with our major trading partners.” He later revealed that he lent money to Celsius and Babel Finance, two digital asset lenders that collapsed this year.
Two weeks ago, Zipmex filed a moratorium on the bankruptcy of its various subsidiaries under Section 64 of the Singapore Insolvency, Restructuring and Dissolution Act 2018.
Now, the Singapore High Court has granted creditor protection to each of the five subsidiaries, giving them some breathing room to deal with their liquidity crises. While the company had requested protection for five months, Judge Aedit Abdullah only extended the protection until December 2, giving the company just under four months to put its house in order. .
Justice Abdullah further ruled that a creditors’ committee should be composed and engaged in the process, and that a public meeting for creditors should also be held.
Zipmex operated two types of accounts: Z and Trade. The former allowed users to stake their digital assets through its ZipUp+ feature and earn interest of up to 10%. Users of its trading accounts had access to its trading platform and could deposit and withdraw at will.
After initially halting all withdrawals, Zipmex has since reopened the feature in a limited mode. For those who had staked, he transferred their assets to their trading accounts for withdrawal, but only those assets he had not lent to other lenders.
Zipmex has been one of many victims of the collapse of the digital asset lending industry. He had loaned $5 million to Celsius, a lender that filed for Chapter 11 bankruptcy amid accusations that CEO Alex Mashinsky was reckless with user funds. Financial Times recently reported that in the three months before Celsius collapsed, Mashinsky took over the lender’s books and directly dictated business strategy. In January alone, he lost $50 million.
Zipmex had lent the most money to Babel Finance, a lender that lost $280 million in high-risk trades. Of this amount, $48 million belonged to Zipmex and played the most significant role in the downfall of the Singapore stock market.
Zipmex investors call for CEO blood, cite loss of trust
After watching the exchange collapse, Zipmex shareholders have lost faith in CEO Marcus Lim and are calling for his resignation.
According to a Bloomberg report, a major stock market investor wrote to the CEO asking him to step down. In his letter, the investor pointed to the stock exchange’s entanglement with Babel Finance as the main reason for investors’ loss of confidence in Lim’s leadership. It is not yet known how many other investors support the call for Lim’s resignation.
While he acknowledged the call to step down, Lim said he was focused on getting the trade back on its feet. On this front, the exchange is said to be in talks with several investors for an injection of liquidity. However, sources say some investors interested in bailing out the exchange demanded that Lim quit first.
“The internal issue of leadership positions (including responses to this letter) is being handled by the board and shareholders. We will deal with this privately and after we resolve operational issues,” the CEO told Bloomberg.
The call for Lim’s resignation will be one of the issues discussed at a general meeting scheduled for this week. However, pushing him back won’t be easy since he owns around 25% of the trade.
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