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Ziglu's Collapse Raises Alarms Over Fund Mismanagement and Crypto Oversight
The fall of Ziglu, a once-promising British crypto fintech, has exposed deeper structural issues in how digital asset firms manage user funds—especially in the absence of tight regulation. What began as a bold effort to offer high-interest crypto products to retail users has ended in frozen accounts, a £2 million shortfall, and widespread uncertainty for more than 20,000 affected customers.
Founded by Mark Hipperson, one of the co-founders of Starling Bank, Ziglu positioned itself as a forward-thinking platform for crypto access and investment. Its flagship product, Boost, launched in 2021, promised interest rates of up to 6%—a significant offering at a time when traditional returns were minimal. But behind the product’s appeal lay a business model that depended heavily on continued inflows and short-term operational liquidity. According to findings from a recent insolvency hearing, the company used customers’ Boost savings to fund day-to-day operations, departing from the intended use of those assets.
Special Administration and a £2 Million Gap
In May, the Financial Conduct Authority issued restrictions that led Ziglu to suspend withdrawals from its Boost product. By June, the company applied to enter special administration, effectively acknowledging that it could not continue operating under the weight of unresolved liabilities. Court disclosures revealed that of the £2.7 million tied up in Boost balances, at least £2 million is missing—leaving around 4,000 customers exposed to potential losses.
While administrators have begun their review of the firm’s remaining assets and future options, the lack of safeguards on the Boost product has raised fresh concerns. Unlike bank savings accounts protected under deposit guarantee schemes, Boost operated more like a high-yield crypto fund, with users accepting risk levels that many now say were not clearly communicated. Although Ziglu’s terms reportedly allowed the platform to repurpose customer funds for internal use and lending, it’s unclear how widely that provision was understood.
No Safety Net for Users’ Crypto Deposits
Ziglu’s offering tapped into growing demand from retail users looking for alternatives to low-yield traditional finance. But in the absence of full regulation, the distinction between a high-interest savings product and a high-risk lending mechanism became blurred. The FCA’s intervention may have come too late to protect many users, some of whom still have separate deposits and withdrawals accounted for—though no timeline exists for when access might be restored.
The firm’s handling of its collapse also raises questions. Customers were reportedly given just one week in June to withdraw their funds before the administration process began. For those invested in Boost, this window meant little: their funds were already frozen and inaccessible. Without a buyer or a significant recovery in assets, much of that £2.7 million could remain locked indefinitely or be lost altogether.
Failed Rescue Efforts and a Broken Deal with Robinhood
The fall of Ziglu follows a failed acquisition attempt by U.S.-based fintech Robinhood, which had eyed the platform as part of a broader strategy to enter the UK market. In 2022, Robinhood agreed to acquire Ziglu for $170 million but eventually backed away after a crypto downturn triggered a revaluation and internal recalibration. The original deal would have provided much-needed capital and may have stabilized Boost, but the exit left Ziglu exposed.
In the months that followed, Ziglu continued to seek new investment. Founder Mark Hipperson, who recently departed the company, told stakeholders that the firm had been close to securing fresh funding that could have covered user liabilities. However, no deal was finalized before the FCA imposed its withdrawal ban. The result: a fintech caught between funding shortfalls and growing scrutiny, now under administration with more questions than answers.
Crypto Fintech Under Pressure as Regulation Lags
Ziglu’s collapse is not just a cautionary tale about poor liquidity management—it’s also a symptom of a wider challenge facing the crypto fintech sector. Firms offering interest-bearing crypto products are walking a tightrope between innovation and compliance. Without clear regulatory frameworks, many platforms build their value propositions on assumptions that ultimately prove fragile.
For the UK, where the government has signaled ambitions to become a global crypto hub, the event is likely to fuel further debate. The Financial Conduct Authority reiterated that crypto remains largely unregulated and warned that users take on significant risk. But as fintech firms continue to design hybrid products that mimic traditional financial offerings, the boundaries between acceptable risk and regulatory failure become harder to define.
The Ziglu case highlights the urgency of that conversation. If digital asset firms are permitted to manage user funds with limited oversight and minimal disclosure, the risk of further collapses remains high. In the meantime, fintech companies promising high returns must reconsider the infrastructure and protections needed to make those promises credible—and sustainable.
