Just weeks after the epic demise of the crypto exchange FTX, the Australian crypto platform Digital Surge has collapsed into administration.
Digital Surge’s administrators, KordaMentha, confirmed that the company had about 30,000 customers and supported over 300 cryptocurrencies.
Users can no longer deposit or withdraw funds from Digital Surge. Kamal Jain, one of the exchange’s users, has his entire superannuation, over $150,000, frozen in a Digital Surge account. “I’ve lost everything, and there’s nothing I can do about it,” he desperately said.
30,000 Digital Surge customers were greatly impacted. Image: Internet
Digital Surge’s rescue plan
Digital Surge markets itself as an “effortless” alternative for Australians to invest in cryptocurrencies, especially through self-managed super funds (SMSF). SMSF is a superannuation fund in which individuals make investment decisions, ranging from real estate to the highly volatile crypto market.
Digital Surge lacks an Australian financial services licence (AFSL), and the broker stated that this is because such a licence is not required for cryptocurrency trading in Australia.
In their efforts to save the company, neither administrators KordaMentha nor the exchange has disclosed how much money is in limbo.
As the voluntary administration was filed, Digital Surge sent its clients a letter about a proposed rescue plan. The proposal would involve a $1 million payment from the directors’ pockets, payment of all corporate earnings to consumers for the next five years, and priority payment of accounts with a balance of less than $250.
Dan Rutter, the CEO of Digital Surge, stated that the administration was required to allow the company’s directors to move forward with an unconventional proposal, which would result in users being bailed out by the firm’s owners.
However, retail investors such as Kamal Jain stated that the proposal was unclear and didn’t feel optimistic about the plan.
The next steps for Digital Surge’s investors
In eight days, those owed money by Digital Surge, including all investors, will be invited to the first meeting of creditors. Companies’ administrations can drag on for months or even years.
The Australian arm of FTX is also in voluntary administration. Investors have up to $1 million invested in the firm. KordaMentha has advised local FTX investors not to expect a full return of capital.
The recent developments highlight a greatly turbulent year for the crypto sector where many crypto platforms have been forced to lay off their staff or file for bankruptcy.
Crypto winter persists. Image: zipmex
BlockFi was among the first crypto firms to collapse right on the heels of FTX’s fall, with over 100,000 creditors clamouring for their money back. Crypto company Voyager has also been placed in administration. Australia-based platform Swyftx was forced to lay off 40% of its staff in the second round of firing, while CoinJar cut 20% of its 50-member team.
Now that Digital Surge has run into trouble, its users can opt for alternative crypto exchanges such as CoinSpot. It boasts ISO 27001 certification, making it the most audited and reputable exchange in Australia. With over 2.5 million users and supporting over 370+ cryptocurrencies, CoinSpot has gained increasing popularity thanks to its competitive fees, unmatched security, and 24/7 customer support.
CoinSpot is the best platform to manage your SMSF crypto portfolio in Australia. Compared to many less popular exchanges, CoinSpot stands out with its easy-to-use interface, a dedicated specialist team to assist with your enquiries 24/7, EOFY year reporting to track your tax and audit obligations, OTC services for high volume trading, as well as the top-tier security protocols. It is very easy to create a Self Managed Super Fund account on CoinSpot.
You can read the CoinSpot review for further information related to CoinSpot’s excellent features.