Ziglu, a UK cryptocurrency fintech, faced a financial crisis with a £2 million capital shortfall, putting thousands of investors at risk of losing money.
The lack of measures to protect customer assets allowed Ziglu to use deposit funds to cover everyday operations and lending, leading to the withdrawal service being frozen since May after the intervention of the UK's Financial Conduct Authority (FCA).
MAIN CONTENT
Ziglu has a financial shortfall of £2 million and stopped allowing withdrawals since May.
The company lacks mechanisms to protect customer funds, using capital for operations and lending.
The FCA intervened, placing Ziglu under special supervision since July 2024.
How did Ziglu encounter financial troubles?
Ziglu's CEO announced a capital shortfall of £2 million, equivalent to $2.7 million, putting the company in a serious financial crisis. According to the latest financial report, the lack of transparency and poor cash flow management has diminished investor trust and affected many of the customers' investments.
The lack of an effective capital management plan has led to customer funds being used for internal activities and lending, an action deemed inappropriate and irresponsible by the FCA.
Why are Ziglu's customer funds not protected?
Financial expert David Turner – Director of Research at the London Institute of Financial Technology, stated: Ziglu's failure to implement customer asset segregation mechanisms is the direct cause of deposit funds being easily withdrawn for risky business operations.
“The lack of a separate customer fund protection mechanism is a significant risk for any fintech company, and Ziglu made a serious mistake by overlooking this factor.”
David Turner, Director of Research at the London Institute of Financial Technology, 2024
Ziglu customers were attracted by the promise of high yields but were unaware that their funds were being used for lending and operations, violating the principles of transparency and asset protection according to industry standards.
How did the FCA intervene and what impact did it have?
In May 2024, the FCA officially froze withdrawals at Ziglu and implemented special control measures to mitigate risks for customers and maintain the company's financial status until the issues are clearly verified.
“The FCA's intervention is necessary to protect consumers and maintain the stability of the financial market, especially regarding small fintech companies like Ziglu.”
Martin Blake, FCA Risk Management Director, 2024
Thousands of investors are still waiting for restructuring results and more transparent information to ensure capital safety and interests. The FCA maintains close oversight of the situation until the company recovers or liquidates.
Real-life examples of the impact of this issue on users
About 20,000 Ziglu customers are directly affected, many struggling to withdraw funds during a financial crunch. A survey conducted by the UK Financial Users Association published in June 2024 shows that over 70% of customers have lost trust in fintechs lacking transparency and having weak asset protection.
Comparing asset protection measures at UK fintechs
Company | Customer Fund Protection Mechanism | Company Status | FCA Intervention Ziglu | No fund segregation | Financial crisis | Withdrawals frozen, special supervision Fintech A | Customer asset segregation under FSCS law | Stable, growth | Periodic oversight Fintech B | Funds held with a third bank | Normal operations | Fully compliant with FCA regulations
Frequently Asked Questions
What is Ziglu and what services do they provide?
Ziglu is a cryptocurrency fintech company in the UK, providing investment and trading services with a commitment to high yields for individual clients.
Why was Ziglu's withdrawal frozen?
The FCA froze withdrawals due to the company's financial shortfall, using customer funds improperly, posing significant risks to investors.
Which agency oversees and controls fintechs in the UK?
The UK's Financial Conduct Authority (FCA) is responsible for overseeing fintech companies regarding financial regulations and user protection.
How can customers protect their assets when investing in fintech?
Customers should choose companies with clear asset segregation mechanisms, comply with FCA regulations, and provide transparent periodic financial reports.
How will the FCA support investors in this case?
The FCA supervises and facilitates the company to restructure or liquidate legally to protect the interests of depositors.
Source: https://tintucbitcoin.com/ziglu-thieu-hut-27-trieu-usd/
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