Key Takeaways
- Zipmex has frozen customer withdrawals citing volatility in the cryptocurrency market.
- The exchange announced the update in a tweet, confirming withdrawals would be paused “until further notice.”
- Zipmex is one of several firms to block customers from accessing their deposited funds in recent weeks in response to the market downturn.
Zipmex, a popular cryptocurrency exchange, has announced that it will be freezing customer withdrawals in light of recent market conditions. This news comes as a surprise to many, as the Zipmex CEO had just denied rumors of financial trouble moments before the announcement. It is unclear how long withdrawals will be suspended for, but customers are urged to contact Zip
Zipmex Pauses Customer Withdrawals
Zipmex has become the latest cryptocurrency firm to resort to drastic measures to deal with the market downturn.
The Asian firm announced 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 difficulties of our key business partners, to maintain the integrity of our platform, we would be pausing withdrawals until further notice.”
Zipmex styles itself as “Asia’s leading digital assets exchange” and offers customers access to assets like Bitcoin, Ethereum, and its own Zipmex token. According to the Zipmex website, customers can enjoy up to 12% in rewards per year by depositing their funds on the platform. For example, the exchange claims to offer 10% annualized returns on USDC and 6% on Bitcoin and Ethereum, though it doesn’t clarify how it generates the yield.
The firm raised $11 million in a Series B funding round in March and more recently landed an investment from Coinbase (the U.S. exchange initially explored a potential acquisition, but the deal fell through).
Zipmex is one of several crypto-focussed firms to suffer challenges in the wake of the market crash. Most crypto assets have plummeted in value over the course of this year, accelerated by key events like the collapse of Terra and Three Arrows Capital’s liquidity crisis.
As a result, Celsius, Voyager Digital, CoinFLEX, Vauld, and Babel Finance have all pulled similar moves to Zipmex to deal with their own liquidity issues, halting withdrawals as they struggle to gather the funds to make their customers whole. Last week, Celsius filed for Chapter 11 bankruptcy in New York. Like Zipmex, the firm promised customers returns that far surpassed traditional banking services.
The decision to freeze customer withdrawals is significant as it effectively blocks customers from accessing their money. As Zipmex has not given any indication of when it plans to re-open withdrawals save for a note that they are paused “until further notice,” today’s update is bad news for the exchange’s customers.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
