Losses for mostly Thai and Singaporean investors could reach 5 billion baht after the apparent failure of the cryptocurrency exchange Zipmex. Zipmex suspended both withdrawals or transfers of digital currencies on Wednesday at 6pm due to “financial difficulties” stemming from its loans to two crypto lenders who are currency facing liquidity problems and have also locked out their investors from trading or removing their digital investments.
The difficulties are with the ZipUp+ and Zipmex Global (Singapore). Zipmex is, or was, Thailand’s second largest cryptocurrency exchange.
Zipmex’s co-founder and CEO Akalarp Yimwilai claims that the financial damage is lower than the 5 billion baht claimed in a podcast hosted by Thammasart University, and says that Zipmex is speaking to their board about releasing the actual numbers in an effort to provide greater transparency about the losses.
Zipmex also says they are preparing to file a lawsuit against the global partners, including Zipmex Global, and is negotiating the sale of its business with investors. The outcomes from both these actions will either take a long time or provide very little, or no, return to the investors in the locally-based cryptocurrency exchanges.
Zipmex Global claims that the exchange’s financial exposure to crypto lenders Babel and Celsius totals US$53 million (1.43 billion baht). Celsius filed for bankruptcy on July 13.
Liquidity-strapped crypto exchange and lender Celsius filed for Chapter 11 bankruptcy protection in the Southern District of New York this week, more than a month after it also halted customer withdrawals because of the crash of crypto values throughout April, May and June.
Crypto broker Voyager Digital has also filed for Chapter 11 bankruptcy after it paused customer withdrawals earlier in July as it faced its own liquidity crisis. Its trigger was the failure of another Singapore crypto hedge fund, Three Arrows Capital.
Celsius has declared US$1.2 billion losses in its balance sheet, another US$5.5 billion in liabilities, most of that comprising customer holdings, and only US$4.3 billion in real assets.
Locally, Zipmex Asia reported last month that they had raised US$40 million from Coinbase, the largest US crypto exchange, along with several Thai listed companies including Krungsri Finnovate, the corporate venture capital firm under Bank of Ayudhya, Plan B Media and Master Ad. The fresh capital finding round aimed to increase the company’s value up to US$400 million.
Krungsri Finnovate yesterday said that a suspension of withdrawals from ZipUp+ would “not impact his firm’s investment deal with the digital exchange platform”.
He said KFIN’s investment proportion of US$41 million in Zipmex Asia is “relatively low compared with the bank’s overall investment”.
Other Thai crypto exchanges, including Upbit, Bitkub and SatangPro, announced, on the back of the Zipmex’s Wednesday statement, that they are not facing any liquidity issues and are not operating any lending businesses.
Zipmex shares dropped on the news this week from around 21 baht per share to trading around 14.2 baht this morning.