Brisbane crypto exchange collapses, suspends 30,000 accounts

Brisbane-based cryptocurrency exchange Digital Surge has collapsed into administration, suspending over 30,000 user accounts after it was caught up in the downfall of troubled international exchange FTX.

Administrators at KordaMentha were appointed to the business on Thursday. Customers at the exchange have been unable to access their funds for the last two weeks, with the company saying in late November it was suspending accounts.

This was due to the business holding “a portion” of its assets – Australian dollars and crypto – on FTX to facilitate trades. FTX spectacularly collapsed last month after it was revealed the company did not have sufficient client funds.

In a statement, KordaMentha administrator Scott Langdon said Digital Surge had entered into administration to protect the interest of customers and creditors, praising the cooperation of the business’ directors.

In a separate statement on Friday, Digital Surge chief executive Dan Rutter said the administration was necessary to let the company’s directors proceed with an unorthodox proposal, which would see users bailed out by the business’ owners.

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The deed of company arrangement proposed by Rutter would include a payment of $1 million from the directors’ own pockets, all profits from the business to be paid to customers for the next five years, and accounts with a balance of less than $250 to be paid in full as a priority.

“The aim and purpose is to provide an opportunity for creditors to be made whole over time, and preserve as much as possible of their digital holdings,” Rutter said.

“There’s no denying this has been an extremely difficult and upsetting time for everyone in the cryptocurrency sector. We have always operated with our users’ best interests at heart, including the decision to enter this process.”