Australian cryptocurrency exchange Digital Surge appears to have narrowly avoided collapse, despite having millions of dollars in digital assets tied to now-bankrupt cryptocurrency exchange FTX.
On Jan. 24 local time, Digital Surge’s creditors approved a five-year bailout plan, which aims to eventually repay its 22,545 customers who had their digital assets frozen on the platform since Nov. 16, allowing the exchange to continue operating.
The bailout was first presented to clients by exchange directors via email on Dec. 8, the same day the company fell into administration.
According to the “Deed of Company Arrangement”, the Australian crypto exchange will receive a loan of $884,543 (AUD 1.25 million) from a partner firm, Digico, allowing the exchange to continue operating and operating.
In a statement, KordaMentha’s directors said creditors would be paid over the next five years out of the exchange’s net quarterly profits.
“Clients will be repaid in cryptocurrency and fiat currency, depending on the asset composition of their individual claims,” KordaMentha said, according to a Jan. 24 report by Business News Australia.
Cointelegraph reached out to Digital Surge, who confirmed that a resolution in favor of the bailout was voted at the second creditors’ meeting on Jan. 24.
“We expect further communications to be provided to all customers as the administrative process with KordaMentha progresses,” he added.
The Brisbane-based cryptocurrency exchange had been operating since 2017, but became one of the casualties of FTX’s collapse in November, freezing withdrawals and deposits just days after FTX filed for bankruptcy and FTX Australia was placed into administration controlled.
At the time, Digital Surge explained that it had “limited exposure to FTX” and would upgrade clients within two weeks, though it was later found to be about $23.4 million, according to Digital Surge’s admin KordaMentha.
Related: “There will be a lot more zeros” — Kevin O’Leary on FTX-like meltdowns to come
The exchange was one of the few cryptocurrency companies to form a robust plan to restart operations and avoid liquidation despite its sizable exposure to FTX.
Since November, several cryptocurrency firms, including cryptocurrency lending firms BlockFi and Genesis, have filed for Chapter 11 bankruptcy protection due to exposure to the fallout from FTX and market turmoil.