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  • Writer's pictureMichael Bacina

First Australian crypto-exchange rescue starts Digital Surge ready to surge back to life


Made with the help of Craiyon. Prompt: "A digital surge"

There has been considerable fall-out and financial suffering from the FTX collapse throughout the crypto community, and in December 2022, Digital Surge, a Queensland based Australian digital currency exchange entered voluntary administration, with AUD$32M of crypto trapped on FTX.


While 76% of companies which enter administration go on to enter liquidation, often leaving little recovery for their customers, the directors of Digital Surge, Josh Lehman and Dan Rutter, refused to let that happen. They stepped up and backed the business, putting forward a rescue proposal with AUD$1.3M of their own money to support the rescue. Under the plan, customers with balances of AUD$250 or below will be paid back in full, and other customers will receive a rebalance of approximately 45% of the value of their crypto accounts when trading resumes. The remaining 55% will be paid from any profits of Digital Surge over the next 5 years, with an interface showing customers how much has been paid to date as distributions are made.


In January 2023, creditors of Digital Surge overwhelmingly voted to support the rescue plan, which could see customers made whole from profits of Digital Surge. Such a restructuring rescue is rare generally and has never been seen in Australia for a crypto-exchange before.


KordaMentha were appointed Administrators and will now be Trustees of a Creditors' Trust charged with overseeing the company for the next five years. Administrator David Johnstone said:

This is a great result for all stakeholders and provides the best possible return to customers and creditors given the circumstances

KM's Digital Assets team, led by Paul Hewson, supported by the author, worked closely with the directors through the restructure, which faced unique challenges arising from the nature of digital assets. Zerocap provided insured safe custody for crypto assets during the administration and the directors have worked around the clock to get the business positioned to recommence trading early nextweek.


The dedication of the directors of Digital Surge combined with the collaborative spirit of the blockchain community seen through customers voting the deal through overwhelmingly, is a rare point of good news for digital currency exchanges.

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