Zipmex becomes latest crypto exchange to block withdrawals

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Cryptocurrency exchange Zipmex has frozen withdrawals, becoming the latest player caught in the fallout from a series of defaults in the digital asset universe.

Founded in 2018 by Marcus Lim and Akalarp Yimwilai, Zipmex lists 2 million users and mainly operates in Singapore and Thailand, but offers services in Australia and Indonesia. Its native token is now trading below 40 cents, down more than 90% from its all-time high.

The firm cited “volatile market conditions” and its exposure to troubled crypto lenders Babel Finance and Celsius for its liquidity crunch on Wednesday announcement. The Thai Securities and Exchange Commission has since requested Zipmex deposited funds clarifications, and the company disclosed in a statement Thursday that it had loaned $48 million to Babel Finance and $5 million to Celsius.

Hong Kong-based Babel halted withdrawals last month due to “unusual liquidity pressures”. New Jersey-based lender Celsius filed for bankruptcy in July after suspending withdrawals for more than a month, where court documents revealed a $1.2 billion hole in the company’s balance sheet .

Zipmex said it was working with both companies to navigate its options. “Our exposure to Celsius was minimal, as such we intended to charge it to our own balance sheet,” the company said in its Thursday statement. Earlier, Zipmex Thailand chief executive Akalarp Yimwilai said in a since-deleted YouTube video that he was in talks with investors for a possible bailout, Bloomberg reported.

“Zipmex is part of the fallout from the crypto-contagion,” said the co-founder of the cryptocurrency data aggregator CoinGecko Bobby Ong, “the insolvency of their counterparty has prevented Zipmex from honoring its obligation to its depositors”.

The company is also the latest victim of a series of meltdowns in the Southeast Asian cryptoverse. Three Arrows Capital, a Singapore-based multi-billion dollar crypto hedge fund, went into liquidation after high-profile defaults. The fund filed for bankruptcy in July, but a subsequent hearing revealed that the physical whereabouts of the two company founders were unknown. A federal judge decided to freeze his remaining US assets during the hearing.

In early July, Singapore-based exchange Vauld announced the suspension of all withdrawals, transactions and deposits for its 800,000 members. Another lender, London-based Nexo, was in talks to buy up to 100% of Vauld.

Both events date back to the fall of the Terra stablecoin in May, which cost investors $60 billion and fueled the liquidity crisis at Celsius.

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