Ziglu’s failure leaves thousands of UK customers at risk of losing their money, following a $2.7 million shortfall.
- About 20,000 savers affected after Ziglu’s withdrawal freeze
- Boost product promised high returns but had no financial protection
- UK’s slow crypto regulation draws criticism following company collapse
Ziglu Faces $2.7 Million Shortfall
Thousands of crypto investors may never see their money again due to a large shortfall at Ziglu, a UK-based fintech company. The firm is now under special administration after halting customer withdrawals in May 2024. Administrators found a $2.7 million gap in the company’s finances. About 4,000 people used Ziglu’s Boost product, which promised up to 6% returns. That product held around $3.6 million in customer money, most of which is now at risk.
Funds May Have Been Misused
Ziglu’s leadership is under serious scrutiny. At a recent High Court hearing, evidence suggested company funds from Boost users were used to cover general expenses instead of being kept separate. This raises questions about how the company was run. The Financial Conduct Authority (FCA) had already stepped in earlier this year, freezing all withdrawals and placing the company into special administration. Efforts are ongoing to recover the funds or sell the company to preserve remaining value.
Ziglu’s Rise and Fall
Founded by Mark Hipperson, who also helped start Starling Bank, Ziglu launched during a boom in digital finance. In 2022, it was worth $170 million and even reached a deal with US trading app Robinhood. But the deal was dropped due to falling crypto markets. The company’s Boost program attracted many savers by offering high returns when regular bank rates were low. However, Boost funds were not protected, unlike traditional savings products. This left investors exposed when Ziglu ran into trouble.
UK Lags on Crypto Rules
The collapse has once again highlighted the UK’s slow progress on crypto laws. Experts say the government has let the country fall behind Europe and the US. While the EU has its MiCA framework and the US advances new laws like the GENIUS Act, the UK has no clear timeline for crypto regulation. Poor rules may have made it easier for companies like Ziglu to mishandle customer funds.
Source: cointelegraph.com
