Digital Surge – a crypto exchange in Australia – is getting a big pat on the back today after avoiding liquidation and enforcing a last-minute plan to keep itself open. Stakeholders of the company signed a recovery plan in mid-February which allowed the company to remain online. The exchange endured a short period of non-trading, though services resumed just a week after the deal went through.
Digital Surge Is Its Own Superman
Things were coming up on the final seconds given the deal was put into effect 24 hours before Digital Surge was set to go into liquidation. This means the company was just one day shy of ending all services and ridding itself of all assets via sales and other methods.
Documents noting the recovery were later submitted to the Australian Securities and Investments commission (ASIC), which has thus given the seal of approval to the plan. Creditors have since been told that a new situation has evolved, and they can now expect to receive payments on any loans or additional monies that were given to Digital Surge in the past.
Based in Brisbane, Digital Surge was one of many crypto enterprises that was hit hard by the fall of FTX, which collapsed last November in a steaming heap of bankruptcy and fraud. Things were first brought to the public’s attention when four months ago, former executive Sam Bankman-Fried complained of a liquidity crunch online. Claiming his company needed fast cash to remain in business, he approached his rival Binance about a potential buyout, but this never materialized, and the company had no choice but to enter the bankruptcy road following this failure. SBF later resigned from his post.
Things didn’t quite end there, however. It turned out that Sam Bankman-Fried had allegedly used customer funds to pay off loans taken out by his other company Alameda Research. He also used them to invest in luxury Bahamian real estate for himself and his fellow executives. Fraud charges were instantly filed against the crypto executive and he was arrested and sent back to the United States. He is now awaiting trial at his parents’ home in California.
This is the first time an Australian crypto exchange has managed to save itself from the chopping block according to Michael Bacina, a digital asset specialist and partner at Piper Alderman. He stated in a recent interview:
Digital assets face challenging legal issues, and it took the hard work of knowledgeable specialists to get here. The deal is a testament to the goodwill seen throughout the blockchain community in Australia.
A Good Outcome for All Traders
David Johnstone, an administrator for Korda Mentha, also threw his two cents in, saying:
This is a great result for all stakeholders and provides the best possible return to customers and creditors given the circumstances.