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Coinbase To Invest in Singapore’s Zipmex following Acquisition Talks

US crypto exchange Coinbase has opted to make strategic investments in Zipmex, a digital asset exchange based in Singapore.

Early this year, Coinbase was planning to acquire Zipmex. But local media reported that the US platform has signed a term sheet committing to make an investment in Zipmex.

Zipmex is currently looking to raise US$40 million in series B+ funding later this year at a valuation of US$400 million.

Launched in 2018, Zipmex has already bagged some $52 million in Series B funding — $41 million raised in September 2021 while $11 million in March this year. The exchange planned to use the funding to expand its presence across Southeast Asia.

Zipmex’s existing investors MindWorks Capital, Master Ad, Bank of Ayudhya’s Krungsri Finnovate, V Ventures, TNB Aura, and B Capital.

Zipmex is headquartered in Singapore and has offices in Indonesia, Thailand, and Australia.

Keeping Pace with Industry Transformations

Coinbase could have increased its footprint in Singapore through the acquisition of Zipmex. But the crypto crash has forced the exchange to rethink its expansion plans.

Earlier this month, Coinbase announced a withdrawal of some job offers and paused hiring indefinitely. The exchange said that the decision is because of the ongoing global economic downturn and the current macro environment coupled with volatility in the crypto market.

Singapore is a major financial hub that has witnessed an increase in crypto adoption. About 93% of its population has moderate insights into the crypto industry and investors looking to invest in reliable crypto exchanges in the country.

Coinbase is one of the best crypto exchanges in Singapore, including Crypto.com, Capital.com, Independent Reserve, and Zipmex.

While Singapore is seeking to cement itself as a key player in crypto-related businesses, its Central Bank (the Monetary Authority of Singapore – MAS) has been putting in place “strong regulations”, so firms that meet its requirements and address risks can operate.

In the country, crypto exchanges must be supervised and licensed under the city-state’s Payment Services Act, mainly for terrorism financing and money laundering risks.

Over 500 companies applied for approval to offer crypto services in Singapore, but only a few have received a full license, while more than 100 firms have either been turned down or withdrawn their applications.

In spite of stricter regulations, investment in the blockchain and crypto sector in Singapore increased tenfold last year. In 2021, Singapore saw 82 deals worth a combined $1.48 billion, according to a KPMG fintech report.

In Talks with "Interested Parties" for Bailout, Says Zipmex

Zipmex, a cryptocurrency trading platform, is looking ahead as it has confirmed that it is in talks with interested parties who would like to bail out the platform from its recently identified woes.

In an announcement it shared on its official Twitter account, Zipmex implied it was not at liberty to disclose the name of the potential backers as it is not bound to do so by a Memorandum of Understanding (MoU) already signed.

“Our conversations with various interested parties have progressed significantly. One of those parties has offered terms in an MOU which includes confidentiality obligations to be able to commence Due Diligence,” the firm said in the Tweet.

It is unclear how or in what capacity the noted “interested parties” will want to help the firm considering the halt of its activities was hinged on the financial difficulties of its partners. The South Asian crypto app revealed that it had massive exposures to two of the most distressed crypto lenders in the industry, including Celsius Network and Babel Finance, respectively.

Zipmex revealed that it had an unsecured loan of $48 million extended to Babel Finance and $5 million to Celsius. While the company said, it is willing to write off its minimal exposure with Celsius against its own balance sheet.

The due diligence being conducted by the interested parties in Zipmex’s business mimics the type Nexo is currently conducting on Vauld Group, another distressed crypto lending platform that halted its withdrawals a few weeks back.

Exploring equity takeovers and significant loan extensions have been one of the most sought-after bailout approaches that distressed crypto firms are willing to secure as the ecosystem’s future is unsure with the current sweeping liquidity crisis. Firms like FTX Derivatives Exchange are at the forefront of this bailout, with one extended to BlockFi and Voyager Digital, respectively.

Zipmex Files for Bankruptcy Protection, Seeking Moratoriums from Third Party Creditors

Singapore-based crypto trading platform Zipmex has halted some of its core activities in response to its partner Celsius Network and Babel Finance’s financial woes, which it has exposed. Reportedly, the trading platform is seeking bankruptcy protection from the local court.

With the latest turn of incidents, Zipmex announced it has submitted an application for a moratorium in Singapore that will protect it from its creditors in the country as long as it explores various solutions to its woes. Local media reported, five applications has been submitted on last Friday (July 22) on behalf of the firm’s different entities seeking moratoriums on legal proceedings for up to six months.

“We submitted moratorium applications in Singapore for all Zipmex entities,” Zipmex said in the announcement, “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 is important to note that a moratorium is not a liquidation of any company, and there is no significant status change from our last update.”

According to local law, such a filing automatically grants respite for either 30 days or until a Singapore court makes a decision on the application, whichever is earlier.

As early as June this year, American digital currency trading platform Coinbase Global Inc was planning to invest in Zipmex after a successful acquisition deal.

Blockchain.News reported earlier that Zipmex is in talks with “Interested Parties” with whom it was discussing potential bailout options. While this option is open to the firm, it is also optimistic that it can salvage some funds from the $48 million Babel Finance is owing in its bankruptcy proceedings.

The Zipmex situation can best be described as an unforeseen one because of the unsecured exposure it has. The firm has said it would not mind writing off the $5 million claims it has against Celsius Network against its own balance sheet, as it has foreseen that the process to claim the funds may be very long and almost impossible.

Amid the filed moratorium and its ongoing woes, Zipmex said it will “continue to operate the Trade Wallet, NFT platform, and other products as normal, and there is no planned interruption to” these services.

Zipmex Resumes Some Altcoin Withdrawals After Suspending Withdrawals in July

Mainstream tokens, including bitcoin and ether, remain locked, but all Solana (SOL) tokens will be credited to investors’ trading wallets, Zipmex’s official statement wrote on Tuesday.

The company set up plans to allow users to withdraw Ripple’s XRP from Zipmex’s Z wallet on August 4 and Cardano’s ADA on August 9.

On July 21 of this year, ZipmexX suspended users from withdrawing cryptocurrencies, citing the possibility that the exchange’s assets could be swallowed up by the financial crisis facing Celsius Network and cryptocurrency lender Babel Finance.

The company revealed that it lent $48 million to Babel Finance and $5 million to Celsius, which has filed for bankruptcy. To address the liquidity crisis, the company is working with the two companies and is actively negotiating a possible rescue package with investors.

Zipmex said that:

“We promised to resolve the Z Wallet situation and resume services. That’s why after having stabilized the situation we’re releasing unaffected digital assets namely: ADA, SOL, and XRP into users’ Trade Wallets starting tomorrow, 2 August 2022.”

In an official announcement, Zipmex said, “Tokens in Z Wallet will be debited and the corresponding amount will be credited back into your Trade Wallet. No user action is required. Once the tokens in the Trade Wallet are available, you may withdraw as per usual.”

Last week, the Thai Securities and Exchange Commission ordered Zipmex’s Thai unit to lift the freeze on some digital coins.

The company said it is doing its best to release some tokens to users’ trade wallets starting in mid-August with full compliance.

Crypto Exchange Zipmex Granted 3-Month Protection from Singapore Court against Creditors

Zipmex, Asia’s leading digital asset exchange, said it has won creditor protection from the Singapore High Court for more than three months, gaining time to address liquidity issues.

ZipmexX suspended cryptocurrency withdrawals on July 21, citing the possibility that the exchange’s assets could be swallowed up by the financial crisis facing Celsius Network and cryptocurrency lender Babel Finance.

Some cryptocurrencies such as Solana (SOL), Ripple’s XRP, and Cardano’s ADA have since resumed withdrawals from Zipmex’s trading wallets. But mainstream coins, including Bitcoin and Ether, are still locked.

The company filed five moratorium applications on July 27, seeking creditor protection for six months, giving it time to restructure its debt.

According to Bloomberg, the Singapore High Court has ordered five Zipmex companies to each have a debt moratorium until Dec. 2, during which the company will be immune from the risk of a creditor lawsuit.

The court’s latest legal action allows them a three-month extension to stop their creditors from starting or continuing any legal proceedings.

The judge believed that the company needed to negotiate with the creditor committee and hold a meeting of creditors.

Lenders are currently conducting due diligence during the exploratory period while court proceedings are taking place in the background.

Zipmex, which operates in Singapore, Thailand, Indonesia and Australia, has been in court for six months of bankruptcy protection to explore its restructuring options.

The Thailand-based cryptocurrency exchange is not the first cryptocurrency company to suspend trading in Singapore.

In August, the Singapore High Court granted troubled cryptocurrency lender Vauld a three-month extension as it continues to explore how to repay its creditors.

Vault has been applying to the court for a six-month moratorium to prepare for the company’s restructuring and possible acquisition by Nexo.

Hodlnaut Applies for Court Protection amid Liquidity Crises

Hodlnaut, a Singapore-based digital currency lending platform, has joined its counterparts in seeking out the protection of the courts with its recent application for Judicial Management.

The crypto lending firm leaked some hints in a little more than a week since it announced it will be halting withdrawals based on its platform in response to the unfavourable market condition.

With the Judicial Management pursuit, Hodlnaut said it will be shielded from investors who may want to seek legal redress for losing their funds. The Judicial Management process will also present a form of a moratorium, granting the embattled crypto lender complete protection for a while.

“As we work towards stabilising our financial situation, the Founders and the Hodlnaut team in Singapore are working closely with our lawyers and have weighed various available options for our next steps,” the latest Hodlnaut announcement reads.

“We are aiming to avoid a forced liquidation of our assets as it is a suboptimal solution that will require us to sell our users’ cryptocurrencies such as BTC, ETH, and WBTC at these current depressed asset prices. Instead, we believe that undergoing judicial management would provide the best chance of recovery. Therefore as of 13 August 2022, Hodlnaut Pte Ltd filed an application with the Singapore High Court to be placed under judicial management.”

According to Hodlnaut, it has requested the court to appoint Tam Chee Chong of Kairos Corporate Advisory Pte Ltd to be appointed as the Interim Judicial Manager and, subsequently, the Judicial Manager.

The move from Hodlnaut is somewhat related to the earlier move from Zipmex and Vauld Group, both of whom have also halted withdrawals and have landed a moratorium from the Singapore High Court. While the Vauld Group earned its moratorium earlier this month, Zipmex’s was issued this week, as reported by Blockchain.News.

Zipmex Appoints Restructuring Firm Kordamentha To Work on Recovery Plan

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Zipmex, a cryptocurrency exchange based in Singapore, announced on Friday that it has appointed an Australian restructuring firm, KordaMentha Pte, to assist with a recovery plan.

KordaMentha will work with Zipmex on how best to reorganize the exchange and preserve its assets.

Apart from that, Zipmex revealed that it is in advanced talks with two potential investors – Country Group Holdings (CGH), a Thailand-based investment firm, and Chalermchai Mahagitsiri, son of Thai billionaire and coffee king Prayudh Mahagitsiri – for a potential deal. That is according to a source with direct knowledge of the matter.

CGH is an investor in Thailand-based Cryptomind Group, which operates decentralized finance (DeFi) asset management platform called Elkrem Capital, the source disclosed.

As per the source, Mahagitsiri plans to invest in Zipmex through his cybersecurity services firm called Cloudsec Asia. Mahagitsiri is also one of Zipmex’s major creditors.

Mahagitsiri owns 10% of Cloudsec Asia through his venture unit V Ventures Technologies Company. The source revealed that V Ventures is also an existing investor in Zipmex, having participated in its Series B round in September last year.

Zipmex said it has requested to meet with Thailand’s Securities Exchange Commission to present the potential investors and a recovery plan.

Financial Difficulties Amid Crypto Market Downturn

Last month, precisely on July 21st, Zipmex suspended withdrawals, citing volatile market conditions and financial difficulties that pushed it to make such a decision.

The exchange is headquartered in Singapore, but also has offices internationally, in Australia, Thailand, and Indonesia.

Zipmex ran into a liquidity crisis after its exposure to embattled Babel Finance and Celsius network went sour, forcing it to halt withdrawals and file for protection from creditors in July. Since then, the exchange has partially released some of the token withdrawals.

On July 28th, Zipmex’s solicitors filed for bankruptcy protection in Singapore, seeking moratoriums to prohibit legal proceedings against the exchange for up to six months.

The firm is currently under a moratorium until 2nd December that provides it protection from creditors while it devises a recovery strategy and finalizes investors for fresh funding.

Thailand Tightens Crypto Advertising Rules after Crypto Zipmex Bankrupted

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Thailand’s Securities & Exchange Commission (SEC) announced Thursday that it has tightened cryptocurrency firms’ advertising rules.

In an emailed statement sent on Thursday, the SEC told various crypto-related companies operating in the country that ads for digital assets must include clear and visible warnings about the risks of investing in cryptocurrencies.

The SEC tightened rules after discovering that some ads contain no warnings about crypto risks while other promotions feature only positive information.

The regulator’s details of the tighter crypto advertising regulations include:

· Advertisements must not feature false, misleading or exaggerated claims

· Warnings of risks must be clear and easy to notice

· The ads must feature balanced views, mentioning both positive and negative factors

· And crypto firms must limit advertising to official channels like their websites

Recently, the authorities announced their plans to provide more protections for retail investors.

The enforcement of the new advertising rules by the SEC comes after Zipmex, a locally licensed crypto exchange, and its regional parent company, Zipmex Pte, headquartered in Singapore, halted withdrawals in July due to a liquidity crisis after their exposure to troubled Babel Finance, and Celsius Networks went sour.

Zipmex, a crypto exchange that operates in markets such as Singapore and Thailand, halted withdrawals as the fallout from a series of defaults spread further into the industry.

The second-largest digital assets exchange in Thailand has been fined $1.92 baht by the local regulator, according to the statement published on Security and Exchange Commission, due to a failure to abide by the standards of professional ethics during the halt in July, under the Royal Decree on Digital Asset Trade 2018.

The Asian platform encountered financial difficulties stemming from dealings with troubled crypto lending firms Babel Finance and Celsius Network Ltd.

Zipmex ran into financial troubles due to its $48 million exposure to Babel and $5 million with Celsius.

Efforts to Improve Consumer Protection

The latest move by Thailand makes it join countries such as the U.K. and Singapore in seeking to protect retail investors in the wake of a $2 trillion selloff in digital asset markets.

In January, the U.K. government strengthened cryptocurrency ads’ rules to bring them in line with other financial assets.

The U.K. financial watchdog, the Financial Conduct Authority (FCA), said the rules would increase consumer protection and also encourage innovation.

In March last year, The U.K. Advertising Standards Authority (ASA) banned what it termed a “socially irresponsible” Bitcoin ad and sent warnings to a group of crypto firms about crypto promotions.

In January this year, the regulator banned two ads by Crypto.com, stating that the firm was encouraging people to purchase Bitcoin with credit cards.

Meanwhile, in January, Singapore’s financial regulator, the Monetary Authority of Singapore, restricted digital asset players from promoting crypto services in public spaces, leading to the removal of advertisements in MRT stations and the dismantling of Bitcoin ATMs.

The regulator is now considering further measures to discourage retail investors from accessing crypto.

Thai Regulator Files Charges Against Zipmex Executives

The Thailand offshoot of the beleaguered digital assets platform, Zipmex might have landed itself in more trouble and this time, it is with the Thai Securities and Exchange Commission (SEC).

As announced by the SEC, it requested information from the trading platform in relation to withdrawals and handling of users’ funds in relation to its ZipUp+ program.

The regulator said its call for information was not honoured by the exchange and its Thai CEO Eklarp Yimwilai, and as such, it is recommending legal action against the platform and the executive.

Reiterating how Zipmex defied its orders and request for information, the SEC said that “Zipmex and Eklarp have a circumstance of not delivering such information to the competent official within the specified time. and upon receiving notification from the competent official, only part of the information was submitted, incomplete, including the circumstance of delay in not submitting the information requested by the competent official without a reasonable cause or an unreasonable excuse.”

The case has been referred to the Technology Crime Investigation Headquarters and the Royal Thai Police (AMC) for further action.

Zipmex suspended withdrawals on its platform back in July, coming off as one of the casualties of the Celsius Network bankruptcy and the liquidity drain of Babel Finance. The trading platform has been doing all it can to get back on its feet including hiring a restructuring firm, KordaMentha to work on a viable recovery path for its business.

The woes of Zipmex are not isolation distress as other major players in the digital currency ecosystem are also currently being weighed down by the unprecedented crypto winter. Voyager Digital, BlockFi, and Vauld Group are amongst the most distressing outfits in the digital currency ecosystem today.

Since it halted withdrawals, Zipmex has been granted a 3-month moratorium by Singapore High Court in order to give it ample time before meeting customers’ requests for their funds.

Indonesia to Update Govt Rules for Crypto, Implement More local Control

Indonesia could see new rules for crypto asset exchanges.

The South Asian country’s trade ministry is planning to issue new rules to govern crypto exchanges that will require two-thirds of the board of directors and commissioners to be Indonesian citizens and live in Indonesia, a deputy minister said Tuesday.

This change has come about due to the financial issues faced by cryptocurrency exchange Zipmex as it has currently stopped users from withdrawing funds.

“We don’t want to give permits (to exchanges) carelessly, so only for those that meet the requirements and are credible,” deputy trade minister Jerry Sambuaga told reporters after a parliamentary hearing.

Sambuaga added that the ministry’s Commodity Futures Trading Regulatory Agency (Bappebti) will issue the new rule soon.

However, a timeframe has not been provided.

According to a document issued by the ministry, the new rule will require will also require an exchange to use a third party to store client funds and prohibit exchanges from re-investing stored crypto assets.

Didid Noordiatmoko, acting head at Bappebti, told the parliamentary hearing that ensuring two-thirds of the board were Indonesians based in the country “could prevent the top management running away when a problem hits the exchange.”

Sambuaga added that the plan to launch an Indonesian crypto asset bourse could hopefully be completed within this year. It has already been delayed from last year.

According to a report by Deal Street Asia, the proposed digital assets exchange is an attempt by the government to protect its masses as the interest in cryptocurrencies has continued to grow among the populace.

The crypto exchange was initially planned to go live in 2021 but was later postponed to the first quarter of 2022. This postponement did not also stir the launch of the exchange as its complexity forced the government to abandon the plan to date.

Bappebti’s data shows that cryptocurrency has gained popularity in Southeast Asia’s biggest economy, with a total transaction volume of crypto assets up more than 1,000% in 2021 at 859.4 trillion rupiahs ($57.37 billion).

The country’s performance in terms of transaction taxes has also improved.

Since the rollout of fintech and crypto transaction taxes in May, Indonesia has amassed nearly $6.8 million, according to the nation’s tax compliance special staffer Yon Arsal.

The Indonesian finance ministry imposed a value-added tax (VAT) of 0.1% on crypto-assets purchases on May 1 this year.

The Indonesian administration decided to tax crypto transactions based on surging popularity among local investors.

Furthermore, crypto interest on Indonesian soil has skyrocketed since the onset of the COVID-19 pandemic. The number of crypto owners stood at 11 million in 2021.