Cryptocurrency exchange trades on after successful restructure
KordaMentha has received the Turnaround Management Association (TMA) Australia Turnaround of the Year Award in the small business category for its turnaround of cryptocurrency exchange, Digital Surge.
The award is highly sought after as each category winner is selected by a cross section of industry participants.
KordaMentha's work with Digital Surge is the world's first
successful turnaround of a cryptocurrency exchange, a strategy that
took the business from insolvency to continuing success.
Digital Surge is a Brisbane-based digital currency exchange that had been experiencing year-on-year growth until half its cryptocurrency holdings were entangled in the global collapse of FTX in November 2022. At that time, Digital Surge had ~$65 million of assets under management and offered ~300 different cryptocurrencies to its 60,000 customers. With half its assets frozen in the FTX bankruptcy, it was suddenly unable to pay all customers, should they choose to withdraw.
Prior to the collapse, KordaMentha's team, led by Partner David
Johnstone, established a relationship with institutional grade
digital asset custodian, Zerocap, which enabled Digital Surge's
remaining $30 million of cryptocurrency to be immediately
transferred to a secure and fully insured facility while a
turnaround strategy was developed.
The KordaMentha team sought feedback from the Company's 60,000 customers and found they preferred to retain the available cryptocurrency, rather than to receive a cash dividend from liquidated assets. A process was developed to equally distribute 300 types of cryptocurrency to creditors during a period of high price volatility, yet another first in the restructuring industry.
The result was all employees were retained, the exchange re-opened
and continued to trade, small creditors were paid in full, and
others received 57c/$ upfront return in cryptocurrency with the
balance to be repaid in cash from recoveries from FTX and profits
generated by Digital Surge over the next five years.
Despite the initial uncertainty and loss, Digital Surge has
retained 70% of customers and has continued to grow and develop its
platform since exiting administration.
For more information on the Digital Surge turnaround click here.