Nasdaq-Listed Crypto Firm Eqonex Seeks Judicial Management

Eqonex (EQOS), a Nasdaq-listed provider of cryptocurrency financial services, has made a consensual application to the Singapore High Court to place the business under judicial management. According to the company’s regulatory filings, this voluntary request was made in accordance with Singapore’s regulations for insolvency, restructuring, and dissolution. The move represents a formal acknowledgment that the company requires court-supervised restructuring to address its financial challenges.

Simultaneously, the company’s Hong Kong-based subsidiaries are undergoing significant restructuring. Diginex, a subsidiary of Eqonex with offices in Hong Kong, has been put into creditors’ voluntary liquidation. Eqonex Capital, the company’s Singapore subsidiary, will likely follow the same path into voluntary liquidation. These coordinated actions across multiple jurisdictions indicate the comprehensive nature of the company’s financial restructuring efforts.

The company stated that these applications are designed to protect and enhance value for all stakeholders, including the group’s clients and creditors, while creating a stable framework for finding optimal solutions. In a formal release, Eqonex admitted it had fallen short of the high expectations it set as one of the first listed, regulated digital asset ecosystems.

Eqonex’s current financial crisis follows a series of unsuccessful financing attempts and strategic missteps. The company had been in advanced negotiations with Bifinity, a Binance affiliate, to secure equity financing through the issuance of additional shares and to prolong a loan provision. These talks culminated in Bifinity agreeing to provide a $36 million loan that could be converted into equity, a deal that led to the appointment of Jonathan Farnell, formerly in charge of operations in the United Kingdom at Binance, as Eqonex’s CEO.

However, the financing arrangement ultimately unraveled when Bifinity withheld the fifth loan tranche due to procedural violations of the loan contract. This funding shortfall proved critical, depriving Eqonex of essential capital needed to continue operations. The company noted in a letter to shareholders that ensuring proper controls during a period when ‘grow-at-all-costs’ development characterized the cryptocurrency space may have hindered its ability to expand as rapidly as intended.

Despite the broader group’s financial troubles, not all Eqonex subsidiaries are facing immediate collapse. Bletchley Park Asset Management and Digivault, two additional divisions of the group, remain operational and are not close to bankruptcy. Digivault, a unit certified with the Financial Conduct Authority in the United Kingdom, will initiate a voluntary trading halt as the restructuring proceeds.

Eqonex’s difficulties reflect a wider crisis spreading through the cryptocurrency industry. The company’s shares dropped nearly 24% in a single day as concerns about crypto market spillover effects intensified, bringing the year-to-date decline to a staggering 91%. This dramatic erosion of market value underscores the severe investor skepticism facing companies in the digital asset space.

The collapse comes amid a perfect storm of industry-wide challenges. FTX, once the second-largest cryptocurrency exchange globally, filed for bankruptcy this month with billions of dollars missing from company accounts. Meanwhile, Genesis, another major industry player, is battling to raise capital for its lending division and has warned potential investors that it may face bankruptcy. These high-profile failures have created a contagion effect, with liquidity drying up across the sector.

The Eqonex situation demonstrates how the crypto industry’s interconnected nature amplifies systemic risks. The company’s reliance on financing from Binance affiliate Bifinity, combined with the broader market downturn following FTX’s collapse, created conditions that proved unsustainable. As regulatory scrutiny intensifies and investor confidence wanes, more cryptocurrency firms may face similar restructuring challenges in the coming months.