Key takeaways:
- A five-year bailout plan for Digital Surge has been adopted by its creditors with the intention of eventually refunding the users whose digital assets were frozen on the platform.
- A loan of $884,543 will be given to Digital Surge, enabling it to carry on with its business.
After creditors approved a rescue plan proposed by founders Josh Lehman and Daniel Rutter, the Brisbane-based cryptocurrency platform Digital Surge will pay clients and unsecured trade creditors 55 cents for every Australian dollar of arguments presented on 8 December.
According to a report, Digital Surge was one of the businesses affected by FTX’s demise in November 2022. When Digital Surge entered administration in December 2022, it had about $23 million in FTX and promptly halted withdrawals and deposits for its 22,545 customers.
Despite an immediate threat of bankruptcy, the platform will continue to operate for the time being owing to a long-term strategy by the creditors.
As things got worse, the exchange entered voluntary administration in December 2022. Management turned over responsibility to insolvency professionals who could independently evaluate the exchange’s financial status.
Digital Surge selected a licenced insolvency professional for this procedure, KordaMentha, a Melbourne-based investment company.
According to a deed of company arrangement (DoCA), Digital Surge will get a loan from the affiliated company Digico for 1.25 million Australian dollars, enabling the exchange to carry on with operations as usual.
Customers with digital wallet balances of $250 or less will receive a complete refund; all other customers will be reimbursed at least 55% of their balances over the course of five years.
Due to exposure to the effects of FTX and market unrest, numerous cryptocurrency businesses, including the lending businesses BlockFi and Genesis, have applied for Chapter 11 bankruptcy protection since November.
Although the exchange has a sizable exposure to FTX, it is commendable that it is one of the few cryptocurrency businesses with a solid plan in place to continue operations and avert bankruptcy.
According to Digital Surge, its directors decided to get engaged with FTX because they thought the SBF led exchange had a good reputation.
The company also mentioned venture capitalists’ investments in FTX, its marketing efforts, and the fact that it had an Australian Financial Services Licence (AFSL).
