Thailand-based cryptocurrency exchange Zipmex is the latest to succumb to the market downturn. It has paused withdrawals following a combination of circumstances that it said is beyond its control.
However, Marcus Lim the co-founder and CEO of Zipmex had dismissed rumors about the company being in trouble following the failed acquisition by Coinbase. In the first quarter of 2022, Coinbase had made an offer to acquire the Thai exchange but the acquisition fell through on June 9. Word is that instead of an acquisition, Coinbase made a “strategic investment”. Lim said an investor makes more sense and highlighted that the company talks to a number of different parties at any point in time. He attributed losing out on the Coinbase acquisition to the ongoing bear market. Lim tweeted that they pulled out in many countries around the world, including Turkey and Latin America.”
Zipmex tweeted that due to a combination of circumstances beyond its control including volatile market conditions and the resulting financial difficulties of our key business partners, to maintain the integrity of the platform, the company is pausing withdrawals until further notice. Zipmex is looking at a Series B+ raise that could potentially value the company at $400 million. The crypto exchange has compliant operations in Thailand, Singapore, Indonesia, and Australia. Its user base reached 200,000 in August 2021 and reported over $1 billion in gross transaction volume since its launch in late 2019.
Sources believe Zipmex could be in trouble prior to freezing customers’ funds, as the company has a Thai exchange license and an exempt status in Singapore. And under the Thai license, the crypto exchange is not allowed to touch customer funds. However, the company has a product called zip-up that effectively lets users move funds under the Singapore entity to earn yield. The funds were given to Babel to hatch the yield. The source pointed out that $100 million was lent to Babel which is now at risk of default. The Hong Kong-based asset manager Babel Finance halted withdrawals in June due to unusual liquidity pressures. Babel hasn’t settled its default creating a $100 million hole in Zipmex.
However, Lim pressed that it’s business as usual and said the company doesn’t comment on rumors.