Crypto exchange Digital Surge to pay back creditors after bailout
- Digital Surge lost about $33 million in the collapse of FTX.
- The exchange froze customer funds on November 16.
- The exchange had passed into voluntary administration in December.
After about two months of anguish, crypto exchange Digital Surge creditors can now smile after news that the exchange will pay back its creditors.
The news came after confirmation that the Australian exchange will receive a 1.25 Australian dollars bailout from an associate business. This was after the creditors approved a long-term recovery plan for the company.
Digital Surge woes
The woes of the Digital Surge crypto exchange started after the collapse of the FTX crypto exchange in November. In total Digital Surge lost about $33 million that it held on FTX.
The Australian exchange immediately swung into action by freezing the digital assets of its more than 22,000 customers. The assets remain frozen to date.
As the situation deteriorated, the exchange passed into voluntary administration (management handed over control to licensed insolvency practitioners to independently assess its financial situation) in December 2022. KordaMentha, a Melbourne-based investment firm, was the licensed insolvency practitioner that Digital Surge appointed for this process.
Rare turn of events
In a rare turn of events, the Digital Surge cryptocurrency is not going to become insolvent after reports that the exchange was going to receive a loan of 1.25 Australian dollars from Digico, which is an associate business. This means the exchange is going to survive the devastating crypto contagion that wiped out $1 trillion across the industry and resulted in several major crypto companies including Genesis filing for bankruptcy.
Following the developments, Digital Surge will pay back its creditors with customers who had $250 in their accounts being repaid in full immediately with the rest receiving 45% of their balance in 5 years.
