Crypto news: Zipmex suspends withdrawals amid volatile market, Crypto Winter fears

Zipmex has become the latest cryptocurrency platform to suspend withdrawals during the industry’s current streak of plunging prices and instability.

The South east Asian crypto asset exchange, which also operates in Australia, announced the news on Twitter, but did not indicate when withdrawal services would be returned.

“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,” they tweeted on late Wednesday night.

The trading platform allows users to buy and sell Bitcoin and cryptocurrencies on the Euthereum blockchain. They also offer an earnings account through their ZipUp product which they claim can offer an annual percentage yield of up to 12 per cent.

CoinGecko reports Zipmex’s price chart has plunged by a massive 33.8 per cent in the 24 hours since they announced the news. Over the past seven days it’s reached a low of $0.375779, after previously sitting at a high of $0.573583.

The trading platform joins other cryptocurrency services like the Celsuis Network and Voyager Digital which have also suspended withdrawals as they battle bankruptcy.

As of August 2021, the firm said they had made $1 billion (A$1.45 billion) in gross transaction value since its launch in August 2019, with its user base expanding to 200,000.

According to CoinDesk via an unnamed industry executive, the “backstory” of Zipmex’s “financial difficulties” are linked to a $100 million (A$145,222) they made to the now troubled crypto lender Babel Finance.

Despite reaching a $2 billion (A$2.9 billion) valuation in May 2022, Babel announced they were also suspending their withdrawal services in June 2022, citing “unusual liquidity pressures” in a notice to customers. They have also since hired US investment banking firm Houlihan Lokey, who specialise in distressed mergers and restructuring.

Currently the cryptocurrency market is in the midst of what traders have dubbed a ‘crypto winter’.

At it’s peak in November 2021, Bitcoin – the market’s most popular cryptocurrency – hit an highest of US$68,000 (A$98,719). Now the currency sits at US$23,366.45 (A$33,928.09)

Speaking to the Australian Financial Review in June, the Asia Pacific leader of State Street Digital, Irgan Ahmad refferred to the downturn as a “polar vortex”.

“This is the first time bitcoin and other cryptocurrencies have gone through such an inflationary environment. It is the fourth crypto winter and the most severe given wider adoption – we are referring to it as a polar vortex,” he said.

However, he believed the large fluctuations and losses will lead to financial institutions to develop more global standards and framework around the financial systems.

“But as far as an asset class is concerned, we think [crypto] is here to stay. There is going to be an evolution of the players and the protocols in the market,” he said.

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