Zipmex risks losing license over liquidity issues and inadequate management

Zipmex, a digital asset exchange operator, is facing a potential revocation of its business licence from the Securities and Exchange Commission (SEC) if it fails to resolve its liquidity problem within a fortnight. This issue arises as the company’s capital fund has fallen below the regulator’s minimum standards.

The SEC board urged Zipmex to overhaul its operations, blaming the company’s inadequate management structure and its inability to uphold the required capital fund as outlined by law, which could result in harm to customers.

In line with the Digital Asset Business Operations Act 2018, Zipmex is expected to provide a progress report to the SEC office within a fortnight, addressing the steps taken to rectify the liquidity issue.

Previously on November 25, 2023, the SEC demanded that Zipmex rectify its financial standing to meet the capital fund criteria. On December 8, the company reported its failure to maintain the required capital fund to the regulator.

Furthermore, an SEC board meeting held on January 11 resolved that Zipmex must revise its operations due to its inability to manage the business efficiently, primarily due to a shortage of qualified personnel. The company has been given a 15-day timeframe to complete this process.

As per the latest directive, Zipmex needs to ensure that its capital fund adheres to the stipulated regulations and adjust its management structure and staff competency to ensure efficient business operations.

Customer deposits

The company is also required to set up a system to prevent misuse of customer deposits and to establish separate accounts for each customer with accurate and up-to-date information, to facilitate asset return if necessary.

Anek Yooyuen, SEC deputy secretary-general, stated that if a digital asset business operator fails to comply with Section 35 of the Digital Asset Business Act 2018, it could lead to licence revocation proceedings.

He added that the SEC prioritises close monitoring of business operators, with daily tracking and reporting of customer assets to ensure compliance with the regulator’s criteria.

In another development, the SEC has also ordered More Return (MORE) to provide clarification by January 17 regarding a shareholder meeting scheduled for Friday to approve an increase in the company’s registered capital. This information should be disclosed via the Stock Exchange of Thailand’s system.

As per the SEC, MORE has planned an extraordinary shareholders’ meeting for January 19 to decide on approving an increase in the company’s registered capital by approximately 1.07 billion baht (US$30 million) from its current 359 million baht (US$10 million).

The plan includes issuing 21,530,245,323 new common shares at a par value of 0.05 baht each to raise the registered capital to 1.43 billion baht (US$40.7 million), reported Bangkok Post.

Shares

These new shares will be offered to existing shareholders (rights offering) by an amount not exceeding 14,353,496,882 shares, and to support the exercise of warrant rights to purchase 7,176,748,441 ordinary shares.

The SEC has received investor complaints regarding the shareholders’ meeting, particularly concerning the impact on existing shareholders due to the issuance of capital increase shares and the unclear purpose of the increase.

In related news, crypto exchange Zipmex faces a crisis, blocking withdrawals due to market conditions and partner issues. CEO promises legal action to recover assets. Read more about crypto to exchange crisis.