Thai SEC Files Legal Charges against Former Zipmex CEO for Alleged Fraud

The Securities and Exchange Commission (SEC) of Thailand has initiated legal proceedings against Akarlap Yimwilai, the former CEO of Zipmex Thailand, alleging his involvement in corrupt practices and deceptive conduct during his tenure at the company.

In an official statement released on Thursday, the SEC announced that charges were filed against Yimwilai at the office of the country’s environmental protection agency, the Economic Crime Suppression Division (ECC), for making false statements regarding its earn program.

Disregard for Transparency

Authorities accused the former Zipmex CEO, who led the exchange from August 2018 until November 2023, of transferring digital assets belonging to customers who participated in the company’s earn program, known as Zipup/ZipUp+, to offshore accounts before changes were made to its terms of service.

Zipup/ZipUp+ is an interest-yield program on Zipmex promising rewards for users utilizing the company’s native crypto wallet, Z Wallet, to buy and store cryptocurrencies on the platform.

However, in April 2022, the company announced changes to the product’s terms of use to align with conditions imposed on Zipmex Asia and its affiliated companies in the region, including Singapore. In the same month, the firm suspended deposit and withdrawal services for Z Wallet for Zipmex Thailand.

The SEC commenced an investigation into the earn program in January 2023.  Authorities reached out to the former Zipmex Thailand CEO seeking clarifications on the program’s administration. During the investigation, regulators discovered that customers’ assets in Z Wallet were transferred to other crypto wallets abroad without the owners’ involvement.

Consequently, the financial authorities alleged that the blatant disregard for transparency led them to believe that Zipmex Thailand had presented false statements to its clients, constituting fraudulent behavior.

“Therefore, it is considered that Zipmex Thailand has committed fraud by presenting false statements and concealing the truth, which should have been disclosed to customers,” stated the SEC.

Just the Beginning

The SEC stated that the legal charges mark the beginning of the criminal law enforcement process, with further investigations and legal proceedings to ensue. The financial watchdog plans to collaborate with other enforcement agencies to ensure progress in litigation.

The company’s troubles with the SEC began in 2022 following the collapse of the Terra (LUNA) blockchain in May. Although the exchange had no direct exposure to the protocol, it had significant exposures to Babel Finance and Celsius Network, which experienced liquidity crises.

In July of the same year, the firm restricted access to withdrawals on the platform and subsequently filed for creditor protection as it sought to raise funds to maintain its balance sheet.

Last  November, the company proposed to repay creditors 3.5 cents on the dollar as part of a restructuring plan, which creditors rejected on the basis of wanting to review the exchange’s assets and liabilities.

Earlier this month, financial authorities ordered Zipmex Thailand to cease digital asset trading and brokerage services on the platform. The order followed the financial regulator’s initial request for the exchange to amend its liquid capital maintenance and management structure in January, aiming to prevent the misappropriation of customer funds.

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2024-02-08 17:21