Crypto exchange Digital Surge emerges as a rare survivor of FTX fallout

Australian cryptocurrency exchange Digital Surge appears to have narrowly avoided bankruptcy despite millions of dollars in digital assets being tied up in the failed FTX cryptocurrency exchange.

On January 24th, local time, Digital Surge’s creditors approved a five-year relief plan. This is aimed at finally refunding his 22,545 customers whose digital assets have been frozen on the platform since November 16, allowing the exchange to continue operating.

The rescue plan was first presented to customers via email by the exchange’s directors on December 8, the same day the company came under control.

Pursuant to the “Deed of Company Arrangement”, the Australian cryptocurrency exchange will receive a loan of $884,543 (AU$1.25 million) from affiliate Digico to enable the exchange to continue trading and operations.

KordaMentha’s management said in a statement that creditors will be paid out of the exchange’s quarterly net income over the next five years.

“Customers will be reimbursed in cryptocurrencies and fiat currencies, depending on the asset composition of their individual claims,” said KordaMentha. according to Business News Australia reported on Jan. 24.

Cointelegraph has reached out to Digital Surge to confirm that the second creditors meeting on January 24 passed a resolution supporting the rescue plan.

“We look forward to providing further communication to all customers as the management process with KordaMentha progresses,” it added.

The Brisbane-based cryptocurrency exchange has been in operation since 2017, but was one of the victims of the FTX collapse in November, when FTX filed for bankruptcy and FTX Australia came under control. Withdrawals and deposits were frozen after just a few days.

At the time, Digital Surge said it had “limited exposure to FTX” and would renew customers within two weeks, but according to Digital Surge administrator KordaMentha, this later amounted to about 2,340. Turned out to be $10,000.

Related: “There will be more zeros” — Kevin O’Leary, FTX-like collapse is coming

The exchange is one of the few crypto companies with solid plans to resume operations and avoid liquidation despite its sizeable exposure to FTX.

Since November, several cryptocurrency companies, including cryptocurrency lending firms BlockFi and Genesis, have filed for Chapter 11 bankruptcy protection as a result of the impact of FTX and market turmoil.