- Digital Surge lost about $33 million in the collapse of FTX.
- The exchange froze customer assets on November 16.
- The exchange had transitioned into voluntary administration by December.
After about two months of fear, the creditors of crypto exchange Digital Surge can now smile after the news that the exchange will pay back its creditors.
The news came after confirmation that the Australian stock exchange will receive an AUD 1.25 bailout from an associated company. This was after creditors approved a long-term recovery plan for the company.
Digital Surge woes
The Digital Surge crypto exchange’s woes began after the collapse of the FTX crypto exchange in November. In total, Digital Surge lost about $33 million it had on FTX.
The Australian stock exchange took immediate action by freezing the digital assets of its more than 22,000 clients. The funds remain frozen to date.
As the situation worsened, the exchange transitioned to voluntary administration in December 2022 (management transferred control to licensed insolvency practitioners to independently assess the financial situation). KordaMentha, a Melbourne-based investment firm, was the licensed insolvency practitioner that Digital Surge appointed for this process.
Rare state of affairs
In a rare turn of events, the Digital Surge cryptocurrency will not become insolvent following reports that the exchange would receive an Australian dollar 1.25 loan from Digico, an associate company. This means the exchange will survive the devastating crypto contagion that wiped out $1 trillion across the industry and led several major crypto companies, including Genesis, to file for bankruptcy.
Following the developments, Digital Surge will repay its creditors, with customers who had $250 in their accounts being immediately refunded in full and the remainder receiving 45% of their balance over 5 years.