Singapore’s High Court has ruled to give each of the five Zipmex entities a moratorium until Dec. 2, 2022 to come up with a restructuring plan, Bloomberg reported on Monday.
The action aims to protect 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 is yet to resume all withdrawals.
Zipmex sought creditor protection for a period of six months subsequently after halting withdrawals, filing five moratorium applications on July 27. The exchange cited liquidity issues due to exposure to the 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 Aedit Abdullah also granted a three-month protection from creditors to Vauld, another local crypto firm that halted withdrawals in early July.
According to some reports, Zipmex shareholders and potential investors have urged CEO Marcus Lim to step down over management decisions which they believe have led to the severe cash crunch.
Cryptocurrency lending is a type of crypto service that allows borrowers to use their crypto assets as collateral to get loans in fiat currencies like the U.S. dollar or stablecoins like Tether (USDT). The practice allows users to get money without having to sell their coins and repay the loan at a later date.
The crypto lending industry has faced massive liquidity issues amid a major bear market of 2022 as lenders became unable to provide full liquidity on assets that were lent out at the same time. According to some industry observers, crypto lending is still able to survive the crisis but it needs to get rid of the maturity mismatch problem.