Australian cryptocurrency exchange Digital Surge goes into administration

Australian cryptocurrency exchange Digital Surge has collapsed into administration, with its 30,000 Aussie customers unable to trade or withdraw money.

(FILES) This file photo taken in London on May 8, 2022 shows gold plated souvenir cryptocurrency Tether (USDT), Bitcoin and Etherium coins arranged beside a screen displaying a trading chart. (Photo by Justin TALLIS / AFP)

Australian cryptocurrency exchange Digital Surge has collapsed into administration, with its 30,000 Aussie customers unable to trade or withdraw money.

The trading platform, set up in 2017, allowed customers to access more than 300 different digital currencies before its collapse.

KordaMentha Restructuring has been appointed as administrators and is working on a rescue package.

An Australian cryptocurrency exchange has collapsed (Photo by Justin TALLIS / AFP)

The directors of Digital Surge, based in Brisbane, will spend $1million of their own money on a repayment plan that aims to refund every customer what they are owed, the Australian Financial Review reported.

The bitcoin exchange froze trading last month after global competitor FTX went under, wiping the balances of all customers.

The $32 billion cryptocurrency exchange filed for bankruptcy amid bombshell revelations that the platform was poorly managed and little more than a Ponzi scheme.

FTX’s epic fall from grace has sent shockwaves around the cryptocurrency world.

Digital Surge had been using the FTX platform for some of its trading.

Another Australian crypto exchange, Swyftx, was forced to lay off 35 per cent of its staff in a second round of brutal cuts earlier this week.

The Brisbane-based company announced to employees late on Monday that 90 of them would be packing up their desks for good.

As many as 30,000 Aussie customers used the trading platform

Swyftx’s joint CEOs, Alex Harper and Angus Goldman, informed workers of the “difficult decision” at a company-wide town hall and released a statement after.

Mr Harper blamed the mass sackings directly on the FTX collapse, including at Swyftx.

According to ASIC documents filed last week, Swyftx’s profit has declined 23 per cent. At the same time, however, they did see a 55 per cent increase in trade volumes.

Swyftx, which announced a $1.5 billion merger with online share trading platform Superhero in June, admitted it had expanded too quickly.

“The truth is that Swyftx grew too fast,” Mr Harper conceded.

KordaMentha’s Scott Langdon said he was very pleased with the cooperative and collaborative approach taken by the directors to understand Digital Surge’s financial position.

He also advised Digital Surge customers their funds were the administrators’ highest priority.

“We fully appreciate the uncertainty the voluntary administration will create. We will proactively and regularly communicate with customers to ensure they are fully informed on the progress of the administration,” he said.

The directors have commenced working with stakeholders to prepare a rescue package. The administrators anticipate this will be in the form of a deed of company arrangement (DOCA), which all creditors will have an opportunity to consider in due course.