Australian cryptocurrency exchange Digital Surge is set to come back online after stakeholders signed the recovery plan on Wednesday, according to documents seen by CoinDesk.
The stakeholders signed the recovery plan a day before the exchange was set to go into liquidation, according to documents submitted to Australian Securities and Investments Commission (ASIC). Creditors were notified earlier today through a circular.
The exchange is expected to resume trading next week, a person familiar with the situation said.
The Brisbane-based exchange was hit hard by the collapse of FTX as it held 33 million Australian dollars on the defunct platform founded by Sam Bankman-Fried.
This is the first successful restructuring of a Australian cryptocurrency exchange, according to Michael Bacina, digital asset specialist and partner at Piper Alderman. "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,” Bacina added.
In December, Digital Surge passed into voluntary administration, a process in which the management hands over control to licensed insolvency practitioners who independently assess its financial situation. Melbourne-based investment firm KordaMentha was appointed as administrators.
In late January 2023, creditors approved a long-term recovery plan for Digital Surge that still needed the company and the administrators to sign on the dotted line within 15 business days. The documents were signed before the deadline ended on Wednesday.
Under Australian law, the approval of a judge is not required, as the vote of the creditors is what decides the outcome.
As previously reported, according to a deed of company arrangement (DoCA), the exchange will receive a loan of 1.25 million Australian dollars from an associated business, Digico, to support the business. The company has now received the loan from the Directors.
According to the DoCA, customers with under $250 will be repaid in full and others will receive at least 45% of their balance immediately and the remaining 55% over five years from profits of the company.
“This is a great result for all stakeholders and provides the best possible return to customers and creditors given the circumstances," said David Johnstone, KordaMentha administrator.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.