Digital Surge, an Australian crypto exchange with 30,000 users, has been placed in administration, preventing customers from trading or withdrawing funds.
Established in 2017, the platform allowed customers to access more than 300 digital currencies.
KordaMentha Restructuring Administrator has been appointed to work on a recovery plan.
The directors of Brisbane-based Digital Surge have promised to invest $1,000,000 of their own money in order to create a payment plan to compensate customers, according to the Australian Financial Review.
The cryptocurrency exchange stopped trading after a major competitor, FTX, declared bankruptcy and cleared out all customer accounts.
The crypto world was rocked by the news that the platform had been mismanaged and was nothing more than a Ponzi scheme.
Digital Surge had used the FTX platform for some of its operations.
An additional Australian crypto exchange, Swyftx, experienced a second severe cutback this week, with 35% of its staff laid off.
Employees in Brisbane were informed on Monday night that 90 of them would have to pack up their desks and move on.
Swyftx joint CEOs Alex Harper and Angus Goldman addressed workers in a company-wide town hall before issuing a statement, in which Harper cited the collapse of FTX as the main cause of the redundancies.
Data from ASIC documents filed last Wednesday shows that Swyftx’s revenue has dropped by 23%, even though trade volumes have increased by 55%.
In June, Swyftx announced a merger of its online stock trading platform with Superhero, but admitted that it had grown too fast.
“The truth is that Swyftx grew too fast,” Harper confessed.
Scott Langdon from KordaMentha expressed satisfaction with the directors of Digital Surge’s collaborative and cooperative approach in understanding their financial situation.
He also reassured clients that their funds are a top priority.
“We fully understand the uncertainty that voluntary administration will create. We will be in regular contact with customers to keep them updated on the progress of the administration,” Langdon said.
The directors have started working with potential buyers to create a rescue package, which is expected to take the form of a Deed of Company Agreement (DOCA). This will then be put to creditors for approval.