Creditors have approved a long-term recovery plan for Digital Surge, an Australian cryptocurrency exchange that has faced troubles, according to a statement from the company.
According to The Guardian, the Brisbane-based exchange held $33 million on FTX, the cryptocurrency exchange that went bankrupt in November.
Creditors of Digital Surge approved a five-year bailout plan that will eventually refund its 22,545 customers whose digital assets have been frozen on the platform since Nov. 16 while allowing the exchange to continue operating.
In December 2022, Digital Surge entered voluntary administration, a process in which management relinquishes control to licenced insolvency practitioners who independently assess the company’s financial situation. KordaMentha, a Melbourne-based investment firm, has been appointed as administrators. The move came just days after FTX and FTX Australia began similar procedures.
The exchange will receive a loan of 1.25 million Australian dollars from a related company, Digico, to allow it to operate, according to a deed of company arrangement (DOCA). Customers with balances of less than $250 will be repaid in full, while others will receive at least 45% of their balance over a five-year period.
We thank customers for their engagement and involvement throughout this process, and for the 90% support we saw in favor of the DoCA, said Digital Surge Founder and CEO Dan Rutter.
The KordaMentha administrators announced in a statement that the exchange’s creditors would be repaid through the use of the exchange’s quarterly net profits over the next five years. This means that the creditors will be paid a portion of the exchange’s profits each quarter until their debts are fully repaid.
Customers will be repaid in cryptocurrency and fiat currency, depending on the asset composition of their individual claims, KordaMentha said.
On Tuesday, a second meeting with creditors lasted more than four hours before the plan to repay the majority of customers over the next five years was approved. Since November 16, approximately 22,000 Digital Surge customers’ digital assets have been frozen, and more than half of the company’s digital assets have been held on FTX.