The Singaporean crypto exchange Zipmex has received approval from the country’s High Court for a 3-month moratorium during which creditors will not be able to take legal actions against the firm.
Five entities owned and operated by the firm will enjoy creditor protection so the broker can exhaust every effort possible to restructure in business so it can continue to serve customers.
In a statement released this morning, Zipmex stated that the moratorium is set to last until 2 December 2022 for the five firms. The company must provide periodical reports to the court about its restructuring efforts and financial situation.
In addition, Zipmex has been directed by the court to host a “town-hall-style meeting” within a month from today where the company will explain what these proceedings mean for investors and creditors.
“Creditors and customers will be provided with regular updates on the progress of the restructuring on a monthly basis and will be extended copies of any court documents filed, which will be shared to creditors via protected Dropbox links as per our previous announcements”, the press release stated.
The court’s approval of Zipmex’s moratorium application is taking place nearly 18 days after the company first announced it was moving to seek protection against creditors as part of its effort to resolve its liquidity crunch.
Zipmex in Talks with Investors While Shareholders Demand Resignation of CEO
As part of its restructuring initiatives, Zipmex has been negotiating with multiple parties that may have an interest in investing in the troubled crypto exchange to shore up its finances after some of its most prominent customers defaulted on their loans.
Thus far, the company has reportedly signed two memorandums of understanding (MOUs) that resulted in fresh capital injections to the firm. However, the parties involved are still conducting due diligence procedures before moving forward with their investments.
Sources cited by the Bangkok Post indicated that shareholders of the crypto exchange are demanding the resignation of its Chief Executive Officer Marcus Lim due to the series of decisions made by the management that led to the current situation.
According to a statement from Lim sent to Bloomberg, these claims are being handled by the Board of Directors of Zipmen but they will be considered only after the company has dealt with its “operational issues”.
Zipmex’s Management Provides Further Details About the Cause of Its Collapse
In a statement published on 1 August, Zipmex’s management attempted to clarify the incidents that led to its decision to pause all withdrawals in July this year. In the press release, the company disclosed that it had dealings with the now-bankrupted crypto lending platform Celsius Network.
The firm was affected by Celsius’ decision to pause all withdrawals and was forced to write off the deposits it had with the crypto platform after it filed for bankruptcy. Zipmex did not clarify how much money it had with Celsius at the time this happened.
In addition, the company said it was also exposed to the collapse of the Hong Kong-based crypto firm Babel Finance although it did not provide any details on how much money it had with the firm either.
The management justified its decision to do business with the two companies by stating that they were backed by “extremely reputable investors” and cited the latest funding rounds of both platforms as relevant facts that strengthened the credibility of both Celsius and Babel Finance.
The firm made some progress in releasing customers’ assets for three digital assets, this being Solana (SOL), Cardano (ADA), and XRP (XRP). Customers are currently able to withdraw 100% of their holdings from their Z Wallets.
“We know it’s a small step, but it’s a step in the right direction. We realize many users will still have some BTC, ETH, and stable coins remaining in Z Wallet. We are working to ensure that we are in full compliance as we start to release some of these tokens into your Trade Wallet starting in the middle of August”, the company stated.
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