Brisbane-based cryptocurrency exchange Digital Surge appears to have somehow escaped collapse, despite having millions of dollars in digital assets tied up in the now-bankrupt crypto exchange, FTX.
Digico, an associated business, will lend Digital Surge $884,543 (1.25 million AUD), allowing the exchange to continue trading and operating.
Customers and unsecured trade creditors of Digital Surge will receive 55 cents for every Australian dollar they claim on 8 December. This agreement emerged after creditors agreed to founders Josh Lehman and Daniel Rutter’s rescue package.
Creditors of Digital Surge yesterday approved a five-year bailout plan. They have the goal of eventually transferring funds to 22,545 customers who had their digital assets frozen on the platform since 16 November. All the while, the exchange would continue operating.
The rescue plan was first communicated to customers via email by the exchanges’ directors on 8 December. This was the same day that the company went into administration.
KordaMentha Restructuring administrators, who are overseeing the deal, stated that the exchange would use its net quarterly profits to pay creditors.
“Customers will be repaid in cryptocurrency and fiat currency, depending on the asset composition of their individual claims.”
Digital Surge, operational since 2017, became one of the major casualties of FTX’s collapse in November last year. The exchange froze its transactions, withdrawals and deposits just days after FTX declared bankruptcy.
Around that time, the exchange had stated that it had “some limited exposure” to FTX. However, it was later discovered that the total exposure was about $23.4 million.
Despite having a substantial exposure to FTX, the exchange is one of the few cryptocurrency companies that have developed a sound plan to resume operations and avoid insolvency.