The $100 million acquisition of Zipmex hit a roadblock yesterday after V Ventures defaulted on a $1.25 million tranche payment.
The impending acquisition of Thai crypto exchange Zipmex is in danger of failing after the buyer missed a $1.25 million payment. according to a Bloomberg report, this payment was due yesterday and is necessary to finance the working capital. In a letter, Zipmex revealed that it would begin the process of liquidating the technology unit Zipmex Technology Co. unless it receives the required payment. The embattled cryptocurrency exchange also plans to suspend that division’s payroll.
Zipmex acquisition payment intended to inject liquidity into the company
The March 23 payment was supposed to be the latest remittance under a $100 million venture capital buyout. Zipmex had accepted the purchase by Thoresen Thai Agencies Pcl subsidiary V Ventures late last year. At the time, the Asian stock market was experiencing a liquidity crisis after suffering from the 2022 cryptocurrency bear market.
Prior to the default on the Zipmex acquisition, the exchange had received three tranches of financing. However, Zipmex does not see the payment problem as an immediate impediment. According to the troubled company, it still has the cash needed to pay salaries. Furthermore, the exchange also hinted that it is working with advisers on the next steps. However, Zipmex did not specify if the last payment would be made, as the company has not yet received a final indication.
Zipmex declined to provide further information on the payment issue. Chief executive Marcus Lim said the company was “bound by confidentiality.”
Zipmex financial problems and subsequent sale
Zipmex’s liquidity crisis in 2022 was due to the crash of Terra and algorithmic stablecoin UST last summer. At the time, the Asian crypto exchange had issued loans to crypto-focused platforms Celsius Network and Babel Finance, which went unpaid. The value of the failed loan payment by Babel and Celsius was around $53 million.
Last July, Zipmex suspended withdrawals following its exposure to the two embattled crypto payment facilitators. In August, the cryptocurrency exchange commissioned a restructuring firm to help with a recovery plan after filing for protection from creditors.
In early November, reports indicated that Zipmex was in advanced talks with V Ventures for a $100 million acquisition. Additionally, reports claimed that V Ventures would pay $30 million in cash and the rest in unspecified digital assets.
According to speculation in late 2022, Zipmex founder Chalermchai Mahagitsiri spoke to two investors about a potential deal. However, the company neither confirmed nor denied the speculation, instead releasing a statement saying:
“Thank you for your interest in our efforts to make our customers whole. As the talks reach a critical and sensitive stage with our potential investor, I am unable to comment as all parties are under NDA and we do not want to jeopardize the deal. I will update you as soon as possible.”
The acquisition finally took place in December, with Zipmex looking to channel the proceeds to unlock client funds. In a court filing, the company disclosed plans to liquidate customers in April 2023.
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Tolu is a Lagos-based blockchain and cryptocurrency enthusiast. He likes to demystify crypto stories down to the basics so that anyone anywhere can understand them without too much prior knowledge. When he’s not up to his neck in crypto-stories, Tolu likes music, loves to sing, and is an avid movie buff.
