Thai cryptocurrency exchange Zipmex has suspended withdrawals on its platform following a “combination of circumstances” beyond its control. News that Zipmex might be in trouble was dismissed as “rumors” by CEO and co-founder Marcus Lim following Coinbase’s failed acquisition of the Thai exchange.
Due to a combination of circumstances beyond our control including volatile market conditions, and the resulting financial difficulties of our key business partners, to maintain the integrity of our platform, we would be pausing withdrawals until further notice.
— ZIPMEX (@zipmex) July 20, 2022
Coinbase made an offer to acquire Zipmex early in the first quarter of 2022. On June 9, the acquisition was backed out. Instead, Coinbase made a “strategic investment” in the company, the amount of which has not been disclosed.
Lim told Cointelegraph that while Coinbase is an interesting partner, “an investment makes more sense at this point.” He explained that the group talks to different parties at any given time, citing the bear market as the reason Coinbase opted out of the acquisition:
“The acquisition fell due to market conditions. They have withdrawn in many countries around the world, such as Turkey and in Latin America. Coinbase is a great strategic partner for the company.”
According to The Block, Zipmex is working on a Series B+ financing that could represent USD 400 million. Zipmex has regulatory regulations to operate in Thailand, Indonesia, Singapore and Australia in August 2021. Zipmex user base reached 200,000, while it has reported more than a billion dollars in transaction volume since its launch at the end of 2019.
According to a Zipmex press release, the company’s subsidiary in Thailand has a brokerage and digital asset exchange license granted by the Thai Ministry of Economy, while the parent company is regulated by the Thai Securities and Exchange Commission.
Nevertheless, a source close to the exchange explained before customer funds were frozen that Zipmex could be in a bind. According to the source, who preferred to remain anonymous, Zipmex “has an exchange license in Thailand and an exception status in Singapore.”
“Under the Thai license they are strictly prohibited from touching customer funds. However, Zipmex has a product on its platform called zip-up that allows users to send funds to the entity in Singapore to generate revenue.”
The source explained that “The funds were given to Bable Finance to generate returns. Close to USD 100 million were lent to Babel, which is currently at risk of defaulting.” In June, Hong Kong-based asset manager Babel Finance suspended withdrawals, due to “unusual liquidity pressures”.
Southeast Asia was not spared from the cryptocurrency bear market, as in Singapore, Vauld froze user funds. Nexo has reportedly offered to buy the company, but has also offered to buy Celsius.
When asked if Zipmex could face consequences similar to Celsius, the source commented that “it is possible. Babel has not been able to pay its debt, and it is a deficit of USD 100 million.” Celsius froze user funds on June 13, and many believe the platform could suffer the same fate as Mt. Gox.
Responding to allegations and rumours, Lim told Cointelegraph that “business is business as usual.” The CEO made it clear that the company “doesn’t talk about rumours.”
However, according to complaints from Zipmex customers and a post on the official Zipmex Twitter account, the company has since frozen customer withdrawals.
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