The Securities and Exchange Commission (SEC) is warning investors to carefully review individual agreements proposed by crypto exchange Zipmex before deciding to make a deal with the company.
The Singapore-based company, which froze customer withdrawals earlier this year because of liquidity woes, recently sent a team of lawyers to clarify its restructuring plan with the SEC.
The company also sent individual arrangements under the ZipUp+ programme to all creditors and customers by email on Dec 16 and posted on its website the same day.
Zipmex Thailand on July 20 temporarily suspended digital asset withdrawals from the company's Z Wallet because Zipmex Singapore's partners Babel Finance and Celsius Network went bankrupt, making it impossible to withdraw funds. Z Wallet is a ZipUp+ investment account managed by Zipmex Singapore.
"The SEC received complaints from Zipmex customers that its privacy agreement is unclear and unfair, and the SEC shares this view. We also found these personal agreements lack information that is material to the customer's decision," the regulator said in a statement.
According to the SEC, the agreement indicated that customers will be terminated from ZipUp+ and they will be able to withdraw assets in Z Wallet only on a date and time announced by Zipmex Pte.
The Zipmex letter stated the release of digital assets from Z Wallet as part of the ZipUp+ programme constitutes full payment of debts, as well as the final settlement of all rights or claims (civil and criminal), whether arising in the past, present or in the future, as a result of the suspension of such transfer of assets.
The agreement also indicated that Zipmex, the Zipmex Group and any director, officer or employee, whether in Singapore or any other country, have no obligation or responsibility to customers under all applicable laws or regulations.
Those include obligations under any contract, and damages sustained by Zipmex, the Zipmex Group and its directors, officers or employees in connection with ZipUp+, as well as holding and releasing Zipmex digital assets in the Z Wallet, or the suspension of transfers as aforementioned.
"The SEC cautions customers who are qualified as Zipmex's creditors to carefully consider the agreements offered by the company before making a decision. We have asked Zipmex to take action as soon as possible to ensure Zipmex and the Zipmex Group's operations are fair and non-discriminatory," the SEC statement said.
In addition, the regulator learned Zipmex plans to hold a meeting to explain individual agreements and restructuring plans for some customers between Dec 21-22. This action is discriminatory and treats customers unequally, said the SEC. Zipmex should expedite the provision so that customers of Zipmex and the Zipmex Group can receive all material information, said the regulator.