Cryptocurrency exchange Zipmex has been given a chance to resolve its liquidity problems, as a Singapore court has granted the company more than three months of protection against its creditors.
The Singapore High Court has ruled to grant each of the five Zipmex entities a moratorium until December 2, 2022 to submit a restructuring plan, Bloomberg reported on Monday.
The action is intended to protect Zipmex from potential creditor lawsuits during the moratorium period after the exchange abruptly stopped withdrawals on its platform in mid-July. Since then, the cryptocurrency has resumed partial withdrawals from the Zipmex trading wallet, but has not yet resumed all withdrawals.
Zipmex sought creditor protection for a period of six months after halting withdrawals, filing five moratorium requests on July 27. The company cited liquidity problems due to exposure to cryptocurrency lender Babel Finance, which halted withdrawals in June.
The Thailand-based crypto exchange is not the first crypto firm to receive a moratorium in Singapore. Judge Aedit Abdullah also granted a protection of three months against creditors to Vauld, another local crypto company that stopped withdrawals early of July.
According to some reports, Zipmex shareholders and potential investors have urged CEO Marcus Lim to resign over mismanagement that they believe has caused the severe liquidity crisis.
Cryptocurrency lending is a type of service that allows borrowers to use their crypto assets as collateral to borrow in fiat currencies like the US dollar or stablecoins like Tether (USDT). This practice allows users to obtain money without having to sell their coins and repay the loan later.
The cryptocurrency lending industry has been facing massive liquidity issues amid a major 2022 bear market as lenders were unable to provide all the liquidity for assets being lent at the same time. According to some industry observers, crypto loans can still survive the crisis, but they need to get rid of the inequality problem by the due date.
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