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Zipmex Files for Bankruptcy Protection, Seeking Moratoriums from Third Party Creditors

Singapore-based crypto trading platform Zipmex has halted some of its core activities in response to its partner Celsius Network and Babel Finance’s financial woes, which it has exposed. Reportedly, the trading platform is seeking bankruptcy protection from the local court.

With the latest turn of incidents, Zipmex announced it has submitted an application for a moratorium in Singapore that will protect it from its creditors in the country as long as it explores various solutions to its woes. Local media reported, five applications has been submitted on last Friday (July 22) on behalf of the firm’s different entities seeking moratoriums on legal proceedings for up to six months.

“We submitted moratorium applications in Singapore for all Zipmex entities,” Zipmex said in the announcement, “This helps protect Zipmex against third party actions, claims, and proceedings while it is active, and enables the team to focus all our efforts on resolving the liquidity situation, without having to worry about defending potential claims or adverse actions while we are doing so. It is important to note that a moratorium is not a liquidation of any company, and there is no significant status change from our last update.”

According to local law, such a filing automatically grants respite for either 30 days or until a Singapore court makes a decision on the application, whichever is earlier.

As early as June this year, American digital currency trading platform Coinbase Global Inc was planning to invest in Zipmex after a successful acquisition deal.

Blockchain.News reported earlier that Zipmex is in talks with “Interested Parties” with whom it was discussing potential bailout options. While this option is open to the firm, it is also optimistic that it can salvage some funds from the $48 million Babel Finance is owing in its bankruptcy proceedings.

The Zipmex situation can best be described as an unforeseen one because of the unsecured exposure it has. The firm has said it would not mind writing off the $5 million claims it has against Celsius Network against its own balance sheet, as it has foreseen that the process to claim the funds may be very long and almost impossible.

Amid the filed moratorium and its ongoing woes, Zipmex said it will “continue to operate the Trade Wallet, NFT platform, and other products as normal, and there is no planned interruption to” these services.

Crypto Lender Vauld Granted 3-Month Protection from Singapore Court against Creditors

Singapore High Court has granted distressed crypto lending firm Vauld a three-month moratorium to continue exploring options on how it can repay its creditors.

The latest legal action from the court allows them to enjoy a three-month moratorium that stops its creditors from starting or continuing any legal proceedings. Vauld now has bought some time until Nov 7 to explore its options. Meanwhile, the court has asked Vauld’s creditors to form a committee.

Following demand letters from some creditors, the judge has given the deadline for Vauld to explore mechanisms for withdrawal for creditors in need.

The crypto lending company owes more than $400 million to its creditors, 90% of which came from individual retail investor deposits.

The lender is currently in the process of due diligence in an exploratory period while the court proceedings take place in the background.

All the creditors will receive updated financial details on the Peter Thiel-backed cryptocurrency lender in another eight weeks, the court stated on Monday in a virtual hearing.

The three-month extension means discontented creditors of Vauld cannot begin or continue any legal proceedings against the firm while it explores its restructuring options.

Vauld’s operations remain halted while its client funds are locked until the firm reaches a restructuring deal, including its potential acquisition by rival London-based crypto lender Nexo.

Vauld had been seeking a six-month moratorium period from the court to prepare for the intended restructuring of the firm and possible acquisition by Nexo.

What Went Wrong with Crypto Lending Firms

On July 5, Singapore-based crypto lender Vauld suspended all withdrawals, trading, and deposits on its platform – an unfortunate incident triggered by the downturn in crypto markets.

Therefore, the firm announced plans to explore potential restructuring options to navigate the challenges it experiences.

A few days later, on July 8, Vauld filed for bankruptcy protection in a Singapore court to give itself “the breathing space” required to prepare for its planned restructure.

It is the latest company to get caught up in the current chaos gripping the crypto world. The recent market crash adversely impacted the operations of several lending firms, including Vauld, Three Arrows Capital, Celsius Network, Voyager Digital, and BlockFi, among others.

The problematic situations have forced some companies to file for bankruptcy while others are looking for emergency capital infusions.

Hodlnaut Applies for Court Protection amid Liquidity Crises

Hodlnaut, a Singapore-based digital currency lending platform, has joined its counterparts in seeking out the protection of the courts with its recent application for Judicial Management.

The crypto lending firm leaked some hints in a little more than a week since it announced it will be halting withdrawals based on its platform in response to the unfavourable market condition.

With the Judicial Management pursuit, Hodlnaut said it will be shielded from investors who may want to seek legal redress for losing their funds. The Judicial Management process will also present a form of a moratorium, granting the embattled crypto lender complete protection for a while.

“As we work towards stabilising our financial situation, the Founders and the Hodlnaut team in Singapore are working closely with our lawyers and have weighed various available options for our next steps,” the latest Hodlnaut announcement reads.

“We are aiming to avoid a forced liquidation of our assets as it is a suboptimal solution that will require us to sell our users’ cryptocurrencies such as BTC, ETH, and WBTC at these current depressed asset prices. Instead, we believe that undergoing judicial management would provide the best chance of recovery. Therefore as of 13 August 2022, Hodlnaut Pte Ltd filed an application with the Singapore High Court to be placed under judicial management.”

According to Hodlnaut, it has requested the court to appoint Tam Chee Chong of Kairos Corporate Advisory Pte Ltd to be appointed as the Interim Judicial Manager and, subsequently, the Judicial Manager.

The move from Hodlnaut is somewhat related to the earlier move from Zipmex and Vauld Group, both of whom have also halted withdrawals and have landed a moratorium from the Singapore High Court. While the Vauld Group earned its moratorium earlier this month, Zipmex’s was issued this week, as reported by Blockchain.News.

Zipmex Requests Moratorium Extension in Singapore

Cryptocurrency exchange Zipmex has requested another extension to its moratorium on debt payments in Singapore due to liquidity issues. The firm has filed a request in Singapore’s courts to extend its existing moratorium period by two months. Zipmex plans to use the extra time to plan and reopen Z Wallet withdrawals.

Zipmex initially filed for a moratorium in July, which allowed the company to postpone payments due to its exposure to Celsius, a cryptocurrency lending platform. The exchange suspended withdrawals earlier that month, while CEO Marcus Lim did not deny reports that the firm was facing insolvency. Singapore’s courts granted Zipmex’s moratorium request, giving the company until December 2022 to come up with a restructuring plan.

However, the platform has continued to request extensions on the moratorium, with the most recent one likely pushing its deadlines to June. In an announcement on April 18, Zipmex said it was in negotiations with investors to “maximize returns for customers” following a delay in payments.

It’s unclear which investor Zipmex was referring to in its latest announcement. In March, venture capital firm V Ventures reportedly did not provide a payment of more than $1 million necessary for Zipmex to avoid liquidating certain operations and stop distributing payroll to employees.

Zipmex’s latest request for an extension highlights the challenges faced by cryptocurrency exchanges in a volatile market. The crypto industry has seen significant fluctuations in value over the past year, with Bitcoin alone experiencing a dramatic rise and fall in value. This has led to liquidity issues for some exchanges, as investors are unable to withdraw funds and pay debts.

The company’s struggles also reflect the broader regulatory challenges facing cryptocurrency exchanges. Many countries are grappling with how to regulate the industry, with some governments taking a more restrictive approach. In Singapore, authorities have implemented strict rules for cryptocurrency exchanges, including requiring them to obtain a license from the Monetary Authority of Singapore (MAS).

Despite these challenges, the cryptocurrency industry continues to attract investors and users around the world. While some exchanges may struggle, others are thriving, and the industry as a whole shows no signs of slowing down. However, as the Zipmex case demonstrates, investors and exchanges must navigate a complex landscape filled with uncertainty and risk.