• FTX, a crypto exchange, filed for bankruptcy last year, leading to a contagion among companies exposed to the exchange.
• Digital Surge, an Australian crypto exchange, lost access to its funds on FTX and suspended withdrawals on its platform.
• Digital Surge proposed a Deed of Company Agreement (DOCA), which requires the creditors’ approval, and the founders of Digital Surge agreed to contribute $1 million from another private source to the firm.
Last year, the crypto industry was rocked by the bankruptcy of FTX, a top crypto exchange. This led to a contagion among companies that were exposed to the exchange, including Digital Surge, an Australian crypto exchange.
Digital Surge had around $23.4 million in digital assets on FTX, and following the bankruptcy, the firm had to suspend withdrawals on its platform. This was a necessary precaution to help protect users’ funds. After this, Digital Surge began looking into possible ways to recover the funds locked on FTX.
On December 8, 2022, Digital Surge contacted its customers and proposed a Deed of Company Agreement (DOCA). This would require the creditors’ approval and the founders of Digital Surge agreed to contribute $1 million from another private source to help support the company’s efforts in repaying all its customers. The founders had already promised the users that the firm would compensate them for their assets on the platform.
In the wake of the FTX bankruptcy, Digital Surge was able to survive the spreading contagion by taking the necessary precautions and proposing a rescue plan for its users. The firm was also able to find additional support from its founders and other sources to help ensure that its customers were compensated for their losses. This serves as an example of how companies can survive and move forward after such a major setback.