Crypto platform Zipmex, which froze withdrawals on July 20, is gradually resuming withdrawals from its Z wallet, according to an Aug. 1 blog post.
The firm had resumed withdrawals from its Trade wallet on July 22. The firm’s Z wallet is used for receiving earnings and bonuses while its Trade wallet is used for trading and withdrawal.
After stabilizing the situation, Zipmex is ready to release 100% of unaffected tokens in the Z wallets of users, the firm said.
Starting Aug 2, Zipmex will release all Solana (SOL) tokens and debit them from the Z wallets of users and credit them into the respective Trade wallets. Once credited to the Trade wallets, users can withdraw their tokens, according to the blog post.
Additionally, on Aug. 4, Zipmex will release all Ripple (XRP) tokens, followed by the release of Cardano (ADA) on Aug. 9. All XRP and ADA tokens will also be credited to users’ Trade wallets for withdrawal, the firm said.
Along with a timeline of the partial withdrawal recommencement, Zipmex provided insights into how it landed in hot water.
The firm’s ZipUp+ account allowed users to earn interest on cryptocurrencies. The customer funds deposited into ZipUp+ accounts were deposited by Zipmex into different lending platforms including the now bankrupt Celsius Network and embattled Babel Finance, Zipmex explained in the blog.
After Celsius declared bankruptcy in mid-July, Zipmex wrote off its $5 million exposure to the lender and absorbed the loss, the firm said.
Zipmex added that it was in regular communication with Babel and was “confident” that Babel would be able to resolve the situation in the short term. However, on July 20, contrary to prior discussions, Babel informed Zipmex that the resolution to the situation would be long drawn and uncertain, according to the blog.
Consequently, Zipmex informed the Thailand Securities and Exchange Commission (SEC) of its situation and halted withdrawals, the lender said.
Zipmex had an exposure of $48 million to Babel, which reportedly lost $280 million through proprietary trading of user funds and is seeking to raise up to $300 million.
The company said it conducted “extensive due diligence” on both Celsius and Babel, covering all aspects including business, legal, compliance, stability, and risk. The firm justified its decision to deposit funds in Celsius and Babel stating that both firms were backed by “extremely reputable investors.”
Celsius was backed by West Cap and Tether, among others, while Babel counts Circle Ventures, 10T Holdings, and Dragonfly Capital among its investors.
Debt moratorium is not bankruptcy
Zipmex clarified that none of its subsidiaries have filed for bankruptcy. It has, however, filed for a moratorium on debt, which protects it against legal action from creditors.
According to the moratorium process, Zipmex creditors can submit statements to the court by Aug. 5, while Zipmex Singapore will submit documents by Aug. 12, the firm said.
The hearing in the Singapore court on the moratorium is scheduled for Aug. 15, according to the blog.
The firm added that it has:
“… no intention to conceal any facts and that everything is being done in accordance with court procedures.
When there is progression, the Company will inform all customers, media and relevant parties.
The path ahead
Zipmex said that it is working to recover assets from Babel Finance and is in “advanced fundraising conversations,” which will allow it to fully resume Z wallet transfers. It added that the firm has held discussions with “multiple reputable, and large-scale investors “and signed a memorandum of understanding with two of them.
Zipmex and its investors are speeding up due diligence to expedite the resolution for customers, the firm said. It added that an existing Zipmex shareholder has made an additional investment in its Zipmex Token (ZMT). The firm is forging ahead with the development of ZMT in line with its roadmap, according to the blog post.