Ziglu users may lose millions after administrators find cash gap
$2.7M shortfall discovered as Ziglu suspends user withdrawals
Several thousand investors in British crypto startup Ziglu may face potential losses after court-appointed administrators uncovered a £2 million ($2.7 million) shortfall in the company's accounts.
In May this year, Ziglu suspended withdrawals for users and was placed into special administration last week. The findings presented by administrators after reviewing the company’s finances are grim: Ziglu is missing approximately $2.7 million.
The platform had previously attracted around 20,000 customers by promoting high-yield investment products like Boost, which offered returns of up to 6%. Launched in 2021 during a low interest rate environment, Boost became a popular crypto investment option.
However, the product was neither protected nor ring-fenced, allowing Ziglu to use customer funds for day-to-day operations and lending. Following intervention by the UK’s Financial Conduct Authority (FCA) in May, withdrawals were frozen, leaving users without access to their money for several weeks.
Customer funds used to cover company expenses
At a recent High Court bankruptcy hearing, directors were accused of mismanaging investor funds. According to The Telegraph, there is evidence that Boost deposits were diverted to cover general cash flow problems prior to Ziglu filing for special administration in June.
The administrators' report noted that around 4,000 customers had frozen Boost investments totaling approximately $3.6 million. Given the $2.7 million shortfall, a large portion of these funds may be lost unless a rescue deal or company sale is secured.
As reported by Cointelegraph, Ziglu — founded by Starling Bank co-founder Mark Hipperson — promoted its mission as enabling "everyone to access the new world of digital money easily, safely and affordably."
Once valued at $170 million, Ziglu struck a deal in 2022 with Robinhood, the U.S. fintech giant. However, the acquisition collapsed amid market turmoil. Audit firm RSM, now managing Ziglu, is seeking buyers for the company.
As we wrote, Robinhood has opened its arm in the United Kingdom
