KordaMentha

Crypto exchange Digital Surge emerges as a rare survivor of FTX fallout

The Australian crypto exchange lost access to $23.4 million of digital assets when FTX collapsed and FTX’s Australian subsidiary went into administration.

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 FTX crypto exchange.

On Jan. 24 local time, Digital Surge creditors approved a five-year bailout plan, which aims to eventually refund its 22,545 customers who had their digital assets frozen on the platform since Nov. 16, while allowing the exchange to continue operating.

The rescue plan was first floated to customers by the exchanges’ directors via email on Dec. 8, the same day the company fell into administration.

As per the “Deed of Company Arrangement,” the Australian crypto exchange will receive a 1.25 million Australian dollar ($884,543) loan from an associated business, Digico — allowing the exchange to continue trading and operating.

In a statement, administrators at KordaMentha stated that creditors would be paid over the next five years out of the exchange’s quarterly net profits.

“Customers 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 from Business News Australia.

Cointelegraph reached out to Digital Surge, which confirmed that creditors voted in favor of the rescue plan at their second meeting, on Jan. 24.

“We expect further communication will be provided to all customers as the administration process with KordaMentha progresses,” it added.

The Brisbane-based crypto exchange had been in operation since 2017 but became one of the casualties of FTX’s collapse in November, freezing withdrawals and deposits only days after FTX filed for bankruptcy and FTX Australia was placed into administration.

At the time, Digital Surge explained they had “some limited exposure to FTX” and would update customers in two weeks’ time — though that exposure was later revealed to be to the tune of around $23.4 million, according to KordaMentha.

The exchange has been one of the few crypto firms to form a solid plan to restart operations and avoid liquidation despite sizeable 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 fallout of FTX and market turmoil.

FTX Australia’s license suspended as 30K Aussies left in the lurch

Three members of a Sydney-based investment and advisory firm are assigned to help Australians impacted by the suspension of the local entity of Sam Bankman-Fried’s former crypto empire.

Australia’s financial markets regulator has suspended FTX Australia’s financial license following the appointment of a voluntary administrator to help nearly 30,000 Australians and 132 Australian companies get their funds back from FTX.

The announcement was made by the Australian Securities and Investments Commission (ASIC) on Nov. 16 local time, which suspended the Australian Financial Services (AFS) license of FTX’s local entity until May 15, 2023.

Before its suspension, FTX Australia’s AFS license permitted it to create a market for derivatives and foreign exchange contracts to Australian-based retail and wholesale clients. Australian traders who signed up to trade digital assets were routed through FTX Australia.

FTX Australia has however, been permitted to provide limited financial services that strictly relate to the termination of existing derivative contracts with its clients until Dec. 19.

The suspension comes as John Mouawad, Scott Langdon, and Rahul Goyal of Sydney-based investment and advisory firm KordaMentha were appointed as voluntary administrators to provide restructuring services to FTX Australia and its subsidiary FTX Express on Nov. 11.

KordaMentha will attempt to recoup the funds of nearly 30,000 Australian investors and 132 Australian companies due to the catastrophic FTX fallout, according to a Nov. 14 report in the Australian Financial Review (AFR).

The report added that FTX Australia employees have been cooperating with KordaMentha’s administrators to resolve the matter. FTX founder and former CEO Sam Bankman-Fried are listed as one of the three directors of FTX Australia.

The suspension of FTX Australia’s customer-facing operations comes nearly eight months after it was established on Mar. 20, the firm also set up a Sydney-based office for its five employees.

Last wee130 firms tied to FTX including FTX US and its partner trading firm Alameda Research filed for Chapter 11 bankruptcy in the United States Code on Nov. 11, the same day that Bankman-Fried also resigned as FTX’s CEO.

ASIC noted that FTX Australia has the right to apply to the Administrative Appeals Tribunal to challenge ACIS’s decision.

Cointelegraph contacted ASIC and FTX for comment but did not receive a response by the time of publication.

FTX Australia’s license suspended as 30K Aussies left in the lurch

Three members of a Sydney-based investment and advisory firm are assigned to help Australians impacted by the suspension of the local entity of Sam Bankman-Fried’s former crypto empire.

FTX Australia has however, been permitted to provide limited financial services that strictly relate to the termination of existing derivative contracts with its clients until Dec. 19.

The suspension comes as John Mouawad, Scott Langdon and Rahul Goyal of Sydney-based investment and advisory firm KordaMentha were appointed as voluntary administrators to provide restructuring services to FTX Australia and its subsidiary FTX Express on Nov. 11.

The suspension of FTX Australia’s customer-facing operations comes nearly eight months after it was established on March 20, the firm also set up a Sydney-based office for its five employees.

ASIC noted that FTX Australia has the right to apply to the Administrative Appeals Tribunal to challenge ACIS’s decision.

Cointelegraph contacted ASIC and FTX for comment but did not receive a response by the time of publication.