Zipmex, a Singapore-based cryptocurrency exchange primarily operating in South-east Asia, filed for bankruptcy protection on Friday, becoming the latest casualty of the downturn in digital assets.
The company's solicitors in Singapore, Morgan Lewis Stamford, filed five applications under the city state's insolvency law on July 22, which sought moratoriums on legal proceedings for up to six months on behalf of Zipmex's entities, which include units in Thailand, Indonesia and Australia, Zipmex said in a statement on its website.
Under Singaporean law, such a filing gives companies an automatic moratorium for a period of 30 days, or until a Singapore court issues a ruling on the application. The automatic moratorium also provides similar protection to Zipmex's units in Singapore.
The exchange, however, said its trade wallet, non-fungible token platform and other products would continue to operate "as normal", with no interruptions planned.
The company suspended withdrawals on July 20, but resumed them a day later, saying it was working to address its $53 million exposure to crypto lenders Babel Finance and Celsius Network, the latter of which had also filed for bankruptcy this month.
"As we continue to work towards resolving our liquidity situation and re-enabling the Z Wallet for all users, we would like to update our users that last Friday, we submitted moratorium applications in Singapore for all Zipmex entities," the Zipmex statement said.
"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 added, noting that the moratorium was "not a liquidation of any company".
The cryptocurrency industry is already in a so-called crypto winter, or a cool-down in the market that has dragged Bitcoin, the world's first and largest cryptocurrency, to crash below its key $20,000 psychological level in June and wiped $2 trillion off the sector’s total market value sending it below $1tn.
Since then, Bitcoin has pared back some of its losses and was trading about 4 per cent higher at $23,982.39 as of 11.25am UAE time on Friday, according to data from CoinMarketCap.
The market is still reeling from the spectacular collapse of the Luna cryptocurrency and its associated Terra stablecoin. Luna, which was trading at $116 in April, fell to less than 1 per cent, while Terra — which, as a stablecoin, was meant to have a value of $1 at all times — was depegged on May 9, causing it to crash to 7 cents.
The turbulence in the market has also been reflected in the funding it has received: venture capital funding to blockchain and cryptocurrency start-ups slid by 29 per cent to $6.5 billion in the second quarter of 2022, market intelligence platform CB Insights said in a report this week.
Zipmex has scheduled a case conference for the applications today, and has invited its creditors.
It added that at the time of their statement, it has received committed expressions of interest from several potential investors, and is in advanced stages of negotiations with them on the structure and terms of their potential investments.
"The moratoriums would give the Zipmex Group the breathing space and time it requires to explore options to resolve the liquidity situation [including to pursue the recovery against Babel Finance], and to formulate a restructuring plan and secure additional investment to secure the Zipmex Group’s operations moving forward," Zipmex said.