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Singapore-based Zipmex crypto exchange has suffered a significant setback as V Ventures, its Thai buyout investor, cancelled a US$100 million deal to rescue the company and return customer funds.
V Ventures has demanded a clawback of US$4.6 million it invested in Zipmex for working capital, according to a Monday report in The Business Times, which cited an April 16 letter viewed by the publication.
Zipmex is also struggling to pay employee salaries as its investor has withheld an injection of cash, according to the newspaper's sources.
In March, Zipmex faced difficulties as it has failed to receive the most recent payment due under a $100 million venture capital buyout. The payment of $1.25 million was due on March 23 to fund working capital. Zipmex said in the letter it would have to start liquidation proceedings for a unit, Zipmex Technology Co., and suspend that division’s payroll unless it receives the money.
The exchange had been receiving three tranches of funding. Its business arms in Thailand, Singapore, and Indonesia were relying on the funds to pay salaries to staff
Proposed deal falls through
Last November, Thoresen Thai Agencies subsidiary V Ventures agreed to purchase digital assets to transfer to Zipmex to help restore customers' access to their cryptocurrencies. In early April, V Ventures proposed a haircut of up to 90% on the deal, which was revised to only give customers and vendors 10 to 20 cents on the dollar of their existing debt instead of fully recovering their money.
This proposal is now off the table as V Ventures deemed the entire deal terminated, accusing Zipmex of not fulfilling its obligations for the funding.
Cryptocurrency prices have risen since V Ventures made the purchase, with Bitcoin’s price jumping 66% this year to trade above US$27,000.
Zipmex's customers and vendors would have fully recovered their debt under a scheme of arrangement approved by Singapore’s High Court last month, which V Ventures was supposed to invest in. However, it withheld a fourth tranche of payment to Zipmex last month, and the agreement is now deemed terminated.
"“Our client urges your clients to abide by the contractual bargain that it has struck and not attempt to renege on it just because cryptocurrency prices have recovered,” Zipmex’s lawyers wrote in a letter on Apr 19, seen by The Business Times.
Now Zipmex is considering taking legal action against V Ventures for reneging on the deal, The Business Times said. But it has identified "at least two" other potential investors based in Thailand.
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