The collapse of the crypto exchange FTX last year shook the industry. The exchange was among the top in the industry, with many investors and firms as users. However, following FTX’s filing for bankruptcy, the investors lost access to their funds on the platform. This outcome caused a contagion among several companies exposed to the distressed exchange.
Digital Surge, an Australian crypto exchange, was one of the firms that lost access to their funds on the FTX exchange. Digital Surge has about $23.4 million in digital assets on the FTX platform. But it has managed to survive the spreading contagion from FTX.
When the FTX exchange collapsed, Digital Surge suspended withdrawals on its platform. The firm mentioned that its action serves as a necessary precaution at the moment. In addition, it reported that it’s working on all possible options to help recover its locked funds on FTX.
The Crypto Exchange Proposed DOCA
Later on December 8, 2022, the directors of Digital Surge contacted their customers through email about the rescue plan for their fund recovery. According to the email, the firm has proposed a Deed of Company Agreement (DOCA) which requires the creditors’ approval.
According to the plan, the founders of Digital Surge, Daniel Rutter and Josh Lehman agreed to contribute $1 million from another private source to the firm. This was to help and support their efforts in repaying all their customers. The founders had already promised the users that the firm would compensate them for their assets on the platform.
Finally, Digital Surge creditors endorsed the 5-year bailout plan for the firm on Tuesday, January 24, 2023. The plan aims at helping the company refund its users.
How Will The DOCA Benefit Digital Surge?
According to the DOCA, Digital Surge will receive 1.25 million Australian dollars (worth $884,543) as a loan from Digico, an associated business. The purpose is to ensure that the Australian crypto exchange continues its operations and trading services.
Also, Digital Surge users and unsecured trade creditors will get 55 cents for every Australian dollar, according to their claims, on December 8, 2022. Again, this was part of the proposal in the DOCA.
According to Business News Australia, administrators David Johnstone, Scott Langdon, and John Mouawad of KordaMentha Restructuring recommended the DOCA. Then the founders of Digital Surge had to propose the deal.
The administrators at KordaMentha stated that customers and unsecured trade creditors of Digital Surge would access their paid amount on the exchange platform. Furthermore, they mentioned that while the payment will last for five years, it will come from the exchange’s quarterly profits.
Also, the customer repayment would be settled in crypto and fiat currency based on the asset composition of the users’ claims.
Victims Of The FTX Exchange Crash
Several crypto-related companies have revealed their exposure to FTX. While some are trying to weather the storm of the impact, some could not survive the blow.
Some affected companies include Galaxy Digital, Sequoia Capital, Genesis, Galois Capital, Crypto.com, BlockFi, CoinShares, and others. Previously, BlockFi and Genesis filed for bankruptcy.
Featured image from Pixabay and chart from Tradingview.com