Digital Surge Survives Crypto Turmoil with $884K Bailout Plan
• Digital Surge narrowly avoided collapse after creditors approved a five-year bailout plan to refund customers who had their digital assets frozen on the platform.
• The Australian crypto exchange will receive a 1.25 million Australian dollar ($884,543) loan from an associated business, Digico — allowing the exchange to continue trading and operating.
• Creditors will be paid over the next five years out of the exchange’s quarterly net profits, with customers to be repaid in cryptocurrency and fiat currency depending on the asset composition of their individual claims.
Australian cryptocurrency exchange Digital Surge has narrowly avoided collapse, despite having millions of dollars in digital assets tied up in the now-bankrupt FTX crypto exchange. After creditors approved a five-year bailout plan, the exchange will receive a 1.25 million Australian dollar ($884,543) loan from an associated business, Digico, allowing it to continue trading and operating.
The rescue plan was first floated to customers by the exchanges’ directors via email on Dec. 8, the same day the company fell into administration. According to the “Deed of Company Arrangement,” creditors will be paid over the next five years out of the exchange’s quarterly net profits. This will enable the Australian crypto exchange to refund its 22,545 customers who had their digital assets frozen on the platform since Nov. 16.
The loan from Digico will be used to pay all of Digital Surge’s creditors, including customers, suppliers and employees. Customers will receive repayment in cryptocurrency and fiat currency, depending on the asset composition of their individual claims. The loan will also support Digital Surge’s continued operations, allowing customers to keep trading.
Digital Surge had lost access to $23.4 million of digital assets when FTX collapsed and FTX’s Australian subsidiary went into administration. The fallout from the collapse of FTX had left many other crypto exchanges in a precarious position, making Digital Surge a rare survivor.
The administration process was managed by KordaMentha, a business advisory firm that specializes in restructuring and insolvency. In a statement, administrators at KordaMentha said that the bailout plan had been accepted by both creditors and customers. The approval of the plan marks the start of Digital Surge’s five-year journey back to financial stability.
Digital Surge’s directors have stated that they are confident that the exchange will be able to weather the current turbulence in the crypto market, and will continue to serve customers for many years to come.