Crypto Exchange Zipmex Freezes Withdrawals Citing Volatile Market Conditions
- Zipmex has halted withdrawals on its platform until further notice citing volatile market conditions.
- The company reportedly lent out $100 million to Babel Finance.
- Zipmex raised $52 million last year during a Series B funding round that pushed its valuation to $400 million.
Despite the company dismissing earlier rumours about potential financial trouble, Southeast Asian crypto exchange Zipmex has announced that it will freeze withdrawals on its platform due to a “combination of circumstances” beyond its control.
This means that users are blocked from taking direct custody of their coins until further notice.
The Singapore-headquartered company reportedly lent out $100 million to asset manager Babel Finance — funds that are now at risk of default.
Last month, Babel Finance halted withdrawals and redemptions citing unusual liquidity pressures. By the end of last year, the company had an outstanding loan balance of $3 billion, up from $2 billion the previous February.
Although the exchange did not provide further details about its decision, Zipmex highlighted volatile market conditions and the “resulting financial difficulties of our key business partners” that have pushed it to take such action.
Earlier this year, cryptocurrency exchange Coinbase made an offer to acquire Zipmex but the acquisition fell through and instead, a strategic investment was made in the company. Although the amount of investment has not been disclosed, the firm confirmed that Coinbase opted out of the acquisition due to the bear market.
Nonetheless, the company did raise $52 million last year during a Series B funding round that valued it at $400 million. One of Thailand’s largest banks, Krungsri Finnovate participated in the round, as well as major multimedia companies Plan B Media and Master Ad.
The company raised an additional $11 million in March this year as part of its series B round.
A String of Freezes
This news comes amidst a series of high-profile crypto firms facing financial difficulties due to a global sell-off in the crypto markets.
Earlier this month, crypto lender Voyager Digital filed for Chapter 11 bankruptcy. The Toronto-based firm estimates that it has more than 100,000 creditors and somewhere between $1 and $10 billion in assets, and liabilities worth the same value.
Voyager Digital joined Three Arrows Capital in filing for bankruptcy, however the latter filed a Chapter 15 petition tied to an ongoing liquidation effort ordered by a court in the British Virgin Islands. Voyager Digital recently entered into a $500 million loan agreement with trading firm Alameda Research to cover losses from its exposure to 3AC.
Notably, the CEO of cryptocurrency exchange FTX has been bailing out a number of firms, for instance, the company signed a deal this month with troubled crypto lender BlockFi with the option to acquire for up to $240 million and has extended loans to Voyager Digital, totalling $485 million in cash and Bitcoin (BTC). FTX itself is also reportedly looking into raising a new round of capital.