Ziglu faces a $2.7 million shortfall when Crypto Fintech enters special management

Thousands of savers are faced with a harsh prospect of losing their investment after administrators discovering a shortfall of £2 million ($2.7 million) at Ziglu, the UK cryptocurrency fintech that collapsed earlier this year.

The company, which stopped its withdrawal in May, took over as special management last week amid concerns over financial management, according to a report Sunday in The Telegraph.

Ziglu attracted around 20,000 customers with a high profit margin promise, especially through its “boost” product offering yields of up to 6%. Boost gained popularity due to its higher revenues as it began in 2021 during a low interest rate period.

However, the product was not protected and not surrounded by a ring fence, allowing the company to use its customer funds for daily operations and lending activities. Following an intervention by the Financial Conduct Authority (FCA) in May, the withdrawal was frozen and savers were locked up from weeks of money.

Related: British Written by Cryptocurrency Fraud of Cold Calls to Two People to Over $2 Million

Ziglu Director is accused of misusing client funds

At a recent high court bankruptcy hearing, the director was accused of mismanaged funds, suggesting that money from the boostsaver has decoupled it to cover general cash flow issues before applying for special management in June according to the telegraph.

According to the report, approximately 4,000 customers have frozen their frozen investments, bringing it to about $3.6 million in total. Due to the $2.7 million shortfall, most of these funds could be lost unless recovered through a rescue or sale transaction.

Founded by former Sterling Bank co-founder Mark Hipperson, Ziglu described its mission as “all people can easily, safely and affordably profit from the new world of digital money.”

The company was once valued at $170 million and signed a deal with fintech giant Robinhood in 2022, later falling amidst the turmoil in the crypto market. RSM, the admin of Ziglu, asks for company buyers.

Related: The UK’s smarter web company added $24.7 million to Bitcoin and currently owns 773 BTC

The UK is lagging behind crypto regulations

The UK’s uncertain stance on digital assets regulation has attracted criticism from industry experts who denounce the “policy procrastination” of countries that lag behind the European Union and the US.

Last month, John Orchard and Lewis McClellan of the Institute for Digital Currency claimed that the UK wasted early leads in the distributed ledger finances by slowing concrete regulatory actions.