Thousands of savers face the grim prospect of losing their investments after administrators uncovered a 2 million pounds ($2.7 million) shortfall at Ziglu, a British cryptocurrency fintech that collapsed earlier this year.The company, which suspended withdrawals in May, was placed into special administration last week amid mounting concerns over its financial management, according to a Sunday report from The Telegraph.Ziglu attracted around 20,000 customers with promises of high-interest returns, particularly through its Boost product, which offered yields up to 6%.
Launched in 2021 during a period of low interest rates, Boost became popular due to its higher returns.However, the product was not protected or ring-fenced, allowing the company to use customer funds for day-to-day operations and lending activities.
Following the Financial Conduct Authoritys (FCA) intervention in May, withdrawals were frozen, leaving savers locked out of their money for weeks.Source: ZigluRelated: UK sentences 2 men to prison over $2M cold-calling crypto scamZiglu directors accused of misusing customer fundsAt a recent High Court insolvency hearing, directors were accused of mismanaging funds, with evidence suggesting that money from Boost savers was diverted to cover general cash flow issues before the company applied for special administration in June, per The Telegraph.The report said that around 4,000 customers had their Boost investments frozen, totaling approximately $3.6 million.
With the $2.7 million shortfall, the majority of these funds could be lost unless recovered through a rescue or sale deal.Ziglu, founded by former Starling Bank co-founder Mark Hipperson, described its mission as empowering everyone to benefit from the new world of digital money, easily, safely and affordably.The company was once valued at $170 million and attracted a deal with US fintech giant Robinhood in 2022, which later fell through amid crypto market turmoil.
Ziglus administrators, RSM, will now seek buyers for the company.Related: UKs Smarter Web Company adds $24.7M in Bitcoin, now holds 773 BTCUK falls behind on crypto regulationThe UKs unclear stance on digital asset regulation is drawing criticism from industry experts, who blame policy procrastination for the country falling behind the European Union and the US.Last month, John Orchard and Lewis McLellan of the Digital Monetary Institute argued that the UK has squandered its early lead in distributed ledger finance by delaying concrete regulatory action.Unlike the EUs Markets in Crypto-Assets (MiCA) framework and the US Senates recent passage of the GENIUS Act, which provide clear guidelines for crypto and stablecoins, the UKs FCA still lacks a confirmed launch date for its crypto regime.Magazine: Baby boomers worth $79T are finally getting on board with Bitcoin