Australian cryptocurrency exchange Digital Surge appears to have narrowly avoided collapse despite having millions of dollars in digital assets tied up in the now-bankrupt crypto exchange FTX.
On January 24 local time, Digital Surge’s creditors approved a five-year rescue plan that aims to eventually refund its 22,545 customers whose digital assets have been frozen on the platform since November 16, while allowing the exchange to continue operating.
The rescue plan was first released to clients by the exchange’s directors via email on December 8, the same day the company went into administration.
Under the “Company Agreement”, the Australian crypto exchange will receive a loan of $884,543 (A$1.25 million) from a related business, Digico – allowing the exchange to continue trading and operating.
In a statement, KordaMentha’s administrators said lenders would be repaid over the next five years from the exchange’s quarterly net profits.
“Clients will be paid in cryptocurrency and fiat currency, depending on the asset composition of their individual claims,” KordaMenta said, according to a Jan. 24 report by Business News Australia.
Cointelegraph contacted Digital Surge, who confirmed that a resolution was voted in favor of the rescue plan at the second meeting of creditors on January 24.
“We look forward to further communication with all customers as the administrative process with KordaMentha progresses,” he added.
The Brisbane-based crypto exchange has been operating since 2017, but was one of the victims of the FTX collapse in November, freezing withdrawals and deposits just days after FTX filed for bankruptcy and FTX Australia was placed into administration.
At the time, Digital Surge explained that they had “some limited exposure to FTX” and would update customers in two weeks – although it was later revealed to be around $23.4 million, according to Digital Surge admin KordaMentha.
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The exchange is one of the few crypto firms to form a solid plan to restart operations and avoid liquidation despite significant exposure to FTX.
Since November, several crypto firms, including crypto lending firms BlockFi and Genesis, have filed for Chapter 11 bankruptcy protection as a result of exposure to the impact of FTX and the market turmoil.