Key points to remember
- Zipmex froze customer withdrawals due to volatility in the cryptocurrency market.
- The exchange announced the update in a tweet, confirming that withdrawals would be suspended “until further notice”.
- Zipmex is one of many companies to block customers from accessing their deposited funds in recent weeks in response to the market downturn.
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Zipmex announced the update in a tweet on Wednesday, saying withdrawals would be suspended “until further notice.”
Zipmex suspends customer withdrawals
Zipmex has become the latest cryptocurrency firm to resort to drastic measures to deal with the market downturn.
The Asian company announced on Wednesday that it had halted customer withdrawals due to market volatility and other factors. a tweet from the company’s official account read:
“Due to a combination of circumstances beyond our control, including volatile market conditions and the resulting financial hardship for our major trading partners, in order to maintain the integrity of our platform, we would be suspending withdrawals until new order.”
Zipmex bills itself as “Asia’s leading digital asset exchange” and offers clients access to assets such as Bitcoin, Ethereum and its own Zipmex token. According to the Zipmex website, customers can enjoy up to 12% rewards per year by depositing their funds on the platform. For example, the exchange claims to offer annualized returns of 10% on USDC and 6% on Bitcoin and Ethereum, although it does not specify how it generates the return.
The company raised $11 million in a Series B funding round in March and recently landed an investment from Coinbase (the US exchange initially explored a potential acquisition, but the deal fell through).
Zipmex is one of many crypto-focused companies that faced challenges in the wake of the stock market crash. The value of most crypto assets has fallen over this year, accelerated by key events such as the collapse of Terra and the liquidity crisis of Three Arrows Capital.
As a result, Celsius, Voyager Digital, CoinFLEX, Vauld and Babel Finance have all taken similar action for Zipmex to deal with their own liquidity issues, halting withdrawals as they scramble to round up the funds to make their customers whole. Last week, Celsius filed for Chapter 11 bankruptcy in New York. Like Zipmex, the company promised its customers returns that far exceeded traditional banking services.
The decision to freeze customer withdrawals is significant because it effectively prevents customers from accessing their money. As Zipmex gave no indication of when it plans to reopen withdrawals, other than a note that they are suspended “until further notice”, today’s update is bad news for exchange clients.
Disclosure: At the time of writing this article, the author of this article owned ETH and several other cryptocurrencies.