Although the Australian crypto exchange Digital Surge had $23.4 million of digital assets locked on the now-defunct crypto exchange FTX, it has somehow managed to survive the collapse resulting from the fallout.
A five-year rescue plan for Digital Surge was authorized by its creditors on January 24 local time. It intends to ultimately reimburse its 22,545 consumers whose digital assets have been locked on the platform since November 16 while enabling the exchange to continue functioning.
On December 8, the day the firm entered administration, the exchanges’ directors sent the rescue strategy to clients for the first time through email.
According to the “Deed of Company Arrangement,” the Australian cryptocurrency exchange would get a loan from a related company, Digico, for $884,543 (1.25 million Australian dollars), enabling the exchange to go on with trading and operations.
Administrators at KordaMentha said in a statement that the exchange’s quarterly net gains will be used to pay creditors over the next five years.
According to a Business News Australia story dated January 24, “Customers will be compensated in cryptocurrency and fiat cash, based on the asset mix of their specific claims,” KordaMentha stated.
Digital Surge stated that a resolution supporting the rescue plan was approved at the second meeting of creditors on January 24.
As the administration process with KordaMentha moves through, “we anticipate that more notification will be delivered to all consumers,” it said.
The Brisbane-based cryptocurrency exchange, which had been running since 2017, was one of the victims of FTX’s demise in November. Withdrawals and deposits were frozen only days after FTX declared bankruptcy and FTX Australia was put under administration.
According to Digital Surge administrator KordaMentha, at the time, the company said it had “some limited exposure to FTX” and would inform consumers in two weeks. However, this exposure eventually turned out to be worth around $23.4 million.
Despite having substantial exposure to FTX, the exchange is one of the few cryptocurrency companies that have developed a sound strategy to resume operations and avoid insolvency.
Due to exposure to the effects of FTX and market unrest, numerous cryptocurrency businesses, including the lending companies BlockFi and Genesis, have filed for Chapter 11 bankruptcy protection since November.
