Cryptocurrency exchange Zipmex has had a chance to settle liquidity issues after a court in Singapore provided the firm with more than three months of creditor protection.
The High Court of Singapore has decided to grant a moratorium to each of the five Zipmex entities with a restructuring plan until December 2, 2022, Bloomberg reported on Monday.
The action is aimed at protecting Zipmex from potential creditor lawsuits during the moratorium period after the exchange abruptly halted crypto withdrawals on its platform in mid-July. The cryptocurrency has since resumed partial withdrawals from Zipmex’s trade wallet, but all withdrawals are yet to resume.
Zipmex filed five moratorium applications on July 27, seeking creditor protection for a period of six months after stopping withdrawals. The exchange cited liquidity issues due to contacts with cryptocurrency lender Babel Finance, which halted withdrawals in June.
The Thailand-based crypto exchange is not the first crypto firm to receive a moratorium in Singapore. Justice Adit Abdullah granted three months of protection from creditors to Wold, another local crypto firm that blocked withdrawals in early July.
According to some reports, Zipmex shareholders and potential investors have urged CEO Marcus Lim to drop management decisions they believe have led to a serious cash crunch.
related: Crypto lending platform Hodlnaut suspends services due to liquidity crisis
Cryptocurrency lending is a type of crypto service that allows borrowers to use their crypto assets as collateral to obtain loans in fiat currencies such as the US dollar or a stable currency such as Tether (USDT). The practice allows users to sell their coins and receive funds without having to repay the loan at a later date.
The crypto lending industry faced massive liquidity issues amid a major bear market in 2022 as lenders became unable to provide full liquidity on lent assets at the same time. Crypto lending is still able to survive the crisis, according to some industry observers, but it needs to get rid of the maturity mismatch problem.
