Crypto Bank Ziglu Goes Bust! Millions in User Funds Frozen

Crypto Bank Ziglu Goes Bust! Millions in User Funds Frozen

Ziglu Collapses Into Special Administration Amid Huge Losses

One of the UK’s well-known crypto banking platforms, Ziglu, has officially entered special administration, a move that signals deep financial trouble and puts millions of pounds in customer funds at risk.

Ziglu, founded by Mark Hipperson, a former co-founder of Starling Bank, requested court approval for special administration after admitting the company was insolvent. The announcement marks a significant blow to the UK’s digital asset ecosystem, especially at a time when regulators are tightening their grip on the crypto industry.

 What Is Special Administration and Why It Matters

Special administration is a type of insolvency process in the UK designed for financial firms that fail and may still hold customer assets. It allows appointed administrators to manage the company’s collapse in a way that:

• Protects user funds (as much as possible)

• Maximizes returns to creditors

• Ensures an orderly shutdown or possible restructuring

On July 7, 2025, two restructuring experts — David Shambrook and Damian Webb from RSM Restructuring Advisory LLP — were officially appointed to handle Ziglu’s administration process.

 Financial Troubles: Over £20 Million in Losses

Ziglu’s downfall has been building up for a while. Internal reports reveal that the company:

• Lost over £20 million for two straight years

• Suffered £4 million in damages due to exposure to Celsius Network, the U.S.-based crypto lender that collapsed in 2022

Despite these warning signs, the platform continued operations until June 13, when the UK’s Financial Conduct Authority (FCA) stepped in and ordered Ziglu to stop issuing electronic money and providing crypto custody services.

 What Happens to Customer Funds Now

According to the administrators, as of late 2023, Ziglu still held:

• £7.25 million in total customer funds

• £6.7 million of that in cryptocurrency assets

But here’s the catch: Withdrawals have been frozen. Customers cannot currently access their money, and there’s no timeline yet for when — or if — they’ll be able to retrieve it.

 Important Warning from the FCA:

The FCA has clearly stated that Ziglu’s crypto operations are not covered by the Financial Services Compensation Scheme (FSCS). This means:

• If Ziglu loses your crypto, you won’t be reimbursed by the government

• Your money is at risk, depending on how much value the administrators can recover

 Ziglu Boost Accounts Also Frozen

The trouble doesn’t stop there. Back in June, users started reporting that their Boost accounts — Ziglu’s high-yield product — had been frozen without notice. Many users complained that they couldn’t withdraw their funds, and now those fears have been confirmed with the platform’s official collapse

 What Caused Ziglu’s Collapse

Several key factors led to Ziglu’s downfall:

1. High Operating Costs

Despite initial buzz and funding, Ziglu failed to scale profitably. The company spent heavily on infrastructure and marketing, but it didn’t attract enough customers to break even.

2. Exposure to Crypto Market Failures

Ziglu had funds locked in Celsius, a now-defunct crypto lender that filed for bankruptcy. That single blow cost Ziglu over £4 million and damaged its balance sheet beyond repair.

3. Tighter Regulations

The UK’s FCA has been cracking down on crypto companies. In Ziglu’s case, the watchdog’s decision to halt its operations only accelerated its collapse.

4. Failed Acquisition Attempt

In 2022, Robinhood tried to acquire Ziglu, but the deal fell through. That could have injected much-needed capital — but the failure to close left Ziglu stranded financially.

 What This Means for Ziglu Customers

If you’re a Ziglu user, here’s what you need to know:

• Withdrawals are frozen — You can’t move your money or crypto right now.

• The administrators are in charge — They’ll determine what can be returned and when.

• There’s no FSCS protection — You’re not guaranteed a refund, even if you did nothing wrong.

• Watch for official updates — The administrators will post updates on Ziglu’s website and may request user claims.

 What’s Next for UK Crypto Regulation

Ziglu’s collapse is just the latest in a string of crypto-related failures in the UK and globally. Regulators are becoming more aggressive, with new rules targeting:

• Crypto custody

• Advertising and promotions

• Stablecoin operations

• Consumer protection laws

It’s clear that regulatory uncertainty, volatile markets, and poor risk management continue to plague even well-known crypto platforms.

 Lessons from the Ziglu Meltdown

Ziglu’s fall from grace serves as a hard lesson for both users and other crypto startups:

• Don’t ignore regulatory red flags

• Diversify exposure — avoid putting funds into unstable lending platforms

• Choose platforms with clear FSCS or insurance coverage

While crypto remains a space full of potential, it’s also risky, especially without robust regulations and financial transparency. As the UK moves to regulate digital assets more seriously, platforms like Ziglu may be just the first of many to face tough scrutiny or fail under pressure.

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