Zipmex Crypto Exchange Faces Thai SEC Trading Suspension

Thailand's financial watchdog, the Securities and Exchange Commission (SEC), has issued a directive to Zipmex, a prominent cryptocurrency exchange, ordering an immediate stop of trading and brokerage activities. This dramatic decision follows the SEC's prior request on January 12, in which it requested Zipmex to reconsider its strategy to preserve liquid capital and reorganize its management system. Despite the allotted time, the SEC's examination on February 1 indicated that Zipmex's efforts fell short of satisfying the standards.

Zipmex, located in Singapore, now has a key 15-day window to fix its financial issues and implement effective safeguards to protect consumer funds from possible exploitation. The exchange is required to demonstrate significant changes in its operational structure and financial health to the SEC throughout this time. The SEC's approval post-review of the filed remedial actions will determine whether Zipmex may continue operations.

Zipmex said that it has already suspended its trading and deposit services in response to the SEC's strict mandate. Additionally, the exchange has advised its customers to remove their assets, mirroring earlier statements issued in December and January.

Zipmex's path through financial instability started in July 2022 with a temporary halt on withdrawals, prompted by the domino effect of the Terra ecosystem collapse and the following demise of other cryptocurrency lending companies. Faced with substantial financial failures, Zipmex sought creditor protection and launched a capital-raising campaign.

To overcome its financial difficulties, Zipmex proposed a restructuring plan in November 2023, proposing an initial payback rate of around 3.35 cents for every dollar of claims filed. This payback rate has the potential to rise to 29.35 cents per dollar if the updated restructuring plan is carried out successfully. However, this suggestion was greeted with opposition from important creditors, who demanded a thorough assessment of the exchange's financial position.

Zipmex filed for bankruptcy protection in Singapore in 2022, owing $97.1 million. The exchange's troubles were exacerbated by its $53 million exposure to troubled cryptocurrency lenders Babel Finance and Celsius. Amid these problems, Zipmex has aggressively sought court reprieves to prolong its debt moratorium, and to develop a sustainable recovery and payback plan.

A once-promising acquisition option that might have infused $100 million into Zipmex fizzled last year when the potential buyer, V Ventures, withdrew its bid.

Zipmex operates in Thailand, Australia, and Indonesia and is under regulatory investigation, primarily from Thailand's SEC. The regulatory authority has expressed worry over Zipmex Thailand's alleged mishandling of a digital asset custodian service, as well as possible conflicts of interest caused by referring clients to its Singapore-based equivalent, Zipmex Pte.

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