Zipmex Says Inquiry Into Internal Processes Finds Nothing

Zipmex Says Inquiry Into Internal Processes Finds Nothing
13 October 2022

Proper due diligence processes were followed by Zipmex Asia over the deployment of digital assets to deployment partners and that the decision to deploy was made by Zipmex’s Credit Risk Committees (CRC), according to a press release shared with Blockhead.

The inquiry into Zipmex’s due diligence process, by law firm Morgan Lewis Stamford LLC (MLS), was commissioned by the Singapore-headquartered platform as part of its review of deployments to digital asset deployment partners. The process involved a review of internal documents and interviews conducted with various members of Zipmex’s CRC.

Related: [UPDATED] Babel Exposure Might Have Caused Zipmex’s Downfall

“No process breaches or instances of misconduct were found,” according to Daniel Chia, who heads the Asia Disputes Practice at MLS.

The platform previously attracted the attention of US crypto exchange Coinbase, which was considering acquiring the platform earlier this year. However, the deal fell through and Coinbase eventually ended up making an undisclosed “strategic investment” into Zipmex as part of a Series B+ funding round. 

Zipmex halted withdrawals in July as it faced liquidity issues due to its exposure to failed crypto lenders Babel Finance and Celsius Network.

According to the MLS report, the CRC had approved to deploy assets to troubled Chinese lender Babel Finance as they rated the firm under the “lowest risk” category due to its deployment track record. Zipmex Asia had previously deployed loans to Babel on nearly 100 separate occasions and all loans were collected on time with accrued interest. Additionally, Zipmex conducted ongoing due diligence, with the latest being in May 2022.

Babel went under restructuring in July 2022.

Related: Singapore Based Crypto Lender Babel Finance on Verge of Collapse

“When crypto companies started to face financial difficulty during the collapse of Luna/Terra, Babel had assured Zipmex that it had good financial health. This, together with its positive track record, prompted the Zipmex’s CRC to decide collectively that conservative deployments to Babel could still be made. Babel also repaid 2 million USDT to Zipmex in June as part of its recovery efforts,” the report said.

Zipmex has since resumed partial withdrawals from its trade wallet and trading has been re-enabled in Thailand and Zipmex is in progress of re-enabling trade in Indonesia.

“Based on the current situation, we have been executing our recovery plan to ensure that our customers can withdraw their assets and will have updates on this in due course,” Marcus Lim, founder and CEO of Zipmex Asia, said.

Blockhead Team
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