Zipmex under Scrutiny: Thailand Orders Suspension over Financial Irregularities

Thailand's Securities and Exchange Commission (SEC) has directed Zipmex Company Limited to temporarily suspend its digital asset trading center and brokerage services. The SEC's decision against Zipmex reflects the company's ongoing struggle to address financial and operational issues despite prior warnings.

According to the SEC, the 15-day window for corrective measures, initiated on January 12, 2024, has lapsed. This led to the action taken during the SEC Committee's meeting held on February 1, 2024.

The committee expressed concerns over Zipmex's failure to address issues related to net liquid capital maintenance, business structure, and potential offenses involving customer property. Under the orders for suspension, effective February 2, 2024, Zipmex must adhere to specific actions.

SEC's Warning to Digital Asset Operators

Anek Yuyuen, the Deputy Secretary General and the SEC's Spokesperson mentioned in a post translated from Thai: "According to the process specified by law, if the digital asset business operator is unable to comply with the SEC's orders under Section 35, paragraph two, within the specified period, the SEC may propose that the Minister of Finance consider revoking the order. This is permissible according to Section 35, paragraph three of the Digital Assets Decree."

Zipmex is required to correct its financial position to maintain funds following regulatory guidelines. The company must modify its management structure and personnel, ensuring efficiency and compliance with legal requirements. Additionally, Zipmex must establish a system preventing the utilization of customers' assets.

Zipmex Faces Regulatory Challenges

Zipmex must submit the results of these corrections within 15 days from the suspension date, after which the SEC will assess and potentially grant permission for the resumption of normal business operations.

During the suspension, Zipmex must prioritize its customers' interests by allowing asset withdrawals at any time. Additionally, the company is tasked with contacting customers for fund and digital asset returns and facilitating money transfers according to customer preferences.

In 2022, Zipmex planned a meeting with potential investors and the SEC before finalizing a funding deal. Despite moratorium protection, the exchange engaged with regulators and other government agencies to present its recovery plans and seek approval.

Zipmex's move involved reaching out to the SEC and other regulatory bodies in the countries where it operates to introduce potential investors and outline its recovery plan to government agencies. Operating across the Asia Pacific region, Zipmex has a significant presence in Thailand, Singapore, Australia, and Indonesia.

The exchange's troubles arise from its exposure to Babel Finance, an Asian crypto-lending platform undergoing liquidation.