White knight behind crypto exchange Zipmex says ‘not obligated’ to make payment, amid concerns of pullout

V VENTURES, the investor behind Asian crypto exchange Zipmex’s US$100 million bailout, has accused Zipmex of not fulfilling certain conditions required for the latest tranche of investment from the firm. It is unclear how this will affect Zipmex’s scheme of arrangement, which the court granted on Thursday (Mar 30).

V Ventures said that the non-fulfilment means it is not obligated to disburse the US$1.25 million meant to fund Zipmex’s working capital as part of the rescue plan, according to a Mar 29 lawyer’s letter to the company seen by The Business Times (BT).

The fate of tens of thousands of Zipmex customers and employees hinges on the completion of a deal between Zipmex and V Ventures, a subsidiary of one of Thailand’s largest investment companies Thoresen Thai Agencies.

But V Ventures has pointed to unresolved matters over Zipmex’s proposed scheme of arrangement, the letter showed, igniting further concerns over the crypto platform’s efforts to save itself from insolvency.

Singapore-based Zipmex is in the midst of a restructuring after being crippled by a US$48 million exposure to crypto lender Babel Finance.

Singapore’s High Court on Thursday approved the company’s scheme of arrangement, but a number of Zipmex’s 70,000 customer-creditors – a majority based in Thailand – fear the company’s white knight may not come through.

Fourth tranche

Akalarp Yimwilai, chief executive officer of Zipmex’s Thailand operations, last week told employees of Zipmex Technology the company could not make full payroll for the month.

It had yet to receive the fourth tranche of payment from its investor, which has been unresponsive, he said on Mar 24.

Should the investor fail to transfer the funds, “we will have no choice but to commence liquidation proceedings for Zipmex Technology Company Ltd”, Yimwilai said in an e-mail seen by BT, referring to the company’s Thai unit that houses most local employees.

Other Zipmex entities, including licensed ones in Thailand, Indonesia and Singapore, have sufficient cash to make payroll.

“With utmost effort, we kept close communication with the investor to seek explanation and resolution but to no avail,” Yimwilai added.

The lawyer’s letter from V Ventures came five days after Yimwilai’s e-mail to staff, the contents of which leaked to the press.

The letter also arrived a day before Zipmex’s scheme of arrangement hearing.

In the letter, V Ventures claimed that Zipmex was to execute certain management agreements and prepare certain financial statements prior to the payment.

V Ventures added that it had not expressed satisfaction with Zipmex’s approach to the scheme of arrangement. The investment agreement between V Ventures and Zipmex Asia, the holding company of Zipmex’s businesses, has a long-stop date of Mar 31.

V Ventures did not immediately respond to a request for comment.

When contacted, a spokesperson of Zipmex said: “As our lawyers represented to the court, all key stakeholders (including the investor) have always been kept abreast of the steps and applications relating to the scheme proceedings. The financials of the group have also been filed as part of update affidavits in the Singapore Courts.”

The spokesperson added: “No objections to the scheme have been raised, save the voting by the creditors as disclosed to the court. We cannot give further comments due to confidentiality obligations imposed by the investor.”

V Ventures has a court-granted super-priority claim over all other creditors on the assets of Zipmex Thailand and Zipmex Exchange Indonesia.

Concerns aired in court hearing

At the scheme hearing on Thursday morning, customer Nawita Direkwut expressed concerns over a media report about Zipmex’s troubles getting payments from its investor. V Ventures has not yet been named in court as the investor behind Zipmex.

“There are great concerns from customers of Zipmex about whether or not this particular (scheme of arrangement) for customers will eventually go through. It’s rather grim as Zipmex has clarified that they were unable to contact the investor, and there are no communications between the two,” said Direkwut.

“And if the investor has bailed out on (US$1.25 million) of operational cost, the whole US$100 million that has to supposedly go through in the next 30 days seems quite grim.”

Zipmex’s lawyers continued to argue for the approval of the scheme of arrangement, reasoning for a chance to complete the investment deal and give creditors what they were owed.

But Justice Aedit Abdullah said: “The concern is whether this will happen at all in the next 30 days, or if it will lead to nowhere.”

Daniel Chia, a Morgan Lewis Stamford partner representing Zipmex, said that Zipmex is in contact with the investor. “The contract is still alive, and yes, we have to complete it. Some of the CPs (conditions precedent) can or may be waived by either party in order to get this through,” he added.

Justice Aedit granted the proposed scheme, and asked for an update on the status of the deal in two weeks’ time. Zipmex’s debt moratorium has been extended to Apr 23.