Australian cryptocurrency exchange Digital Surge appears to have 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 bailout plan, which aims to repatriate 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 floated to customers by the exchange’s director via email on December 8, the same day the company went into administration.
According to the “Corporate Arrangement Deed,” the Australian crypto exchange will receive a loan of $884,543 (1.25 million Australian dollars) from its related business, Digico – allowing the exchange to continue trading and operating.
In a statement, the administrator at KordaMentha stated that creditors will be paid over the next five years from the exchange’s quarterly net profits.
“Customers will be paid in cryptocurrency and fiat currency, depending on the asset composition of individual claims,” KordaMentha said, according to a January 24 report from Business News Australia.
Cointelegraph reached out to Digital Surge, which confirmed that at the second meeting of creditors on January 24, a resolution was chosen for the rescue plan.
“We expect further communication to be provided to all customers as the administration process with KordaMentha progresses,” he added.
The Brisbane-based crypto exchange has been operating since 2017 but was one of the victims of FTX’s 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 within two weeks – although this was later revealed to be around $23.4 million, according to Digital Surge administrator KordaMentha.
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The exchange is one of the few crypto companies that have made solid plans to restart operations and avoid liquidation despite FTX exposure.
Since November, several crypto companies, including crypto lenders BlockFi and Genesis, have filed for Chapter 11 bankruptcy protection as a result of the FTX crash and market turmoil.