Akalarp Yimwilai founder and CEO of Zipmex said on Thursday that the exchange’s financial exposure to troubled crypto lenders Babel and Celsius is US$48 million, or 1.7 billion baht, and $5 million, or 184 million baht, respectively, as of July 21. Celsius filed for bankruptcy on July 13.
The company will gradually open trading on all crypto coins. But still closed the withdrawal of cryptos in ZWallet, he said.
Thailand’s second-largest cryptocurrency exchange Zipmex temporarily suspended withdrawals on Wednesday due to financial difficulties stemming from its loans to the two troubled crypto lenders, and resumed trading later on 2 pm at night but still does not allow to withdrawals of cryptos in Zwallet.
Zipmex Thailand together with Zipmex Global (Singapore) will prosecute Babel and Celsius to bring money back to investors. The company will use the money to refund clients, he said.
Following the news of Zipmex’s suspension of withdrawals, Zipmex Token (ZMT) tumbled by 40% to around 12 baht as of 2 pm yesterday. The price then gradually rebounded after Zipmex issued an official statement to clarify how to proceed and solve the problems.
IMPACT ON ZIPMEX BACKERS
On June 10, 2022, Krungsri Finnovate (KFIN), the corporate venture capital firm under Bank of Ayudhya, made some investment in Zipmex Asia along with other firms in a Series B funding round.
Sam Tanskul, managing director at KFIN, said KFIN’s investment proportion in Zipmex Asia is relatively low compared with the bank’s overall investment. It is not connected to the company’s Finnoventure private equity fund, as the equity fund has no policy to invest in digital assets.
He added said a suspension of withdrawals from ZipUp+ would not impact his firm’s investment deal with the digital exchange platform.
Several digital asset exchanges, including Upbit, Bitkub and SatangPro, clarified to the public on Wednesday that they are not facing any liquidity issues or operating any lending businesses.
KTBST Securities has a slightly negative view of the listed companies investing in Zipmex Asia and expects the shares of these companies to face pressure in the short term.
According to KTBST, PLANB invested $2 million (67 million baht), while MACO invested $5.9 million (197 million baht) in Zipmex Asia through comprehensive income, meaning there will be no negative impact on the companies’ profits and losses. These two companies revealed that returns from their investments in Zipmex Asia would be in dividends.
Brooker Group (BROOK) revealed that its subsidiary, Brooker International (BICL), deposited cash worth 1.8 million baht and 0.07989444 Bitcoin, totalling about 1.9 million baht, in its trade account with Zipmex Thailand.
The company confirmed it does not have any investments in ZipUp+ and sent an order to withdraw and retrieve the full amount of its assets.
SEC OVERSIGHT
Jitipol Puksamatanan, financial economist and investment strategist at UOB Asset Management, said investors were made aware of the risks of digital assets before investing.
“The consensus among institutional and big investors all points to the SEC [Securities and Exchange Commission] staying out of regulating Thailand’s crypto sector. Investors were warned the scenario happening now with Zipmex was possible, yet they still chose to bear the risks,” Mr Jitipol said.
He said the main concern is how Zipmex would proceed and return the money to its investors.
“If by chance Zipmex gets lucky and is able to raise capital by selling itself off, as the CEO said yesterday, then it’d be a happy ending for investors. I know some people want the SEC to step in,” said Mr Jitipol.
He approved of Zipmex Thailand’s planned class action lawsuit and urged Thai digital asset exchanges to be more transparent about how they use their investors’ money.
Saree Ongsomwang, secretary-general of the Thailand Consumer Council, commented about the damage control tactic by Zipmex on her Facebook page Thursday morning.
“Zipmex cannot suspend trading,” she said. “Whether this is considered unfair treatment of consumers, the SEC must assess and handle the situation. When consumers make a decision to buy, sell or invest, it is our prerogative.”
