How crypto platform Digital Surge recovered from the FTX crash

In early November last year, FTX, then one of the world’s largest crypto exchanges collapsed with the company owing close to US$3.1 billion to its creditors and its founder being arrested in the Bahamas. 

Dan Rutter, co-founder at Digital Surge.

This collapse impacted several Australian businesses, Digital Surge being one of them.

Digital Surge was founded in 2017 as an accessible platform for Australians to access, own, and trade digital currencies.

Dan Rutter, co-founder at Digital Surge spoke to Digital Nation about how the FTX crash impacted their business and how they were able to get back on their feet post-crash.

Rutter said as a liquidity provider, FTX's collapse created a challenging situation for them and their customers.

“Swift action was taken by the team to suspend deposits and withdrawals, aiming to protect customer funds and mitigate potential disruptions,” he said.

To address the aftermath of the FTX collapse, Digital Surge entered voluntary administration and worked with the appointed administrator, KordaMentha, to develop a rescue plan.

“The successful implementation of a Deed of Company Arrangement (DOCA) allowed Digital Surge to restructure the company and establish a repayment plan for customers,” he explained.

“The DOCA proposal was voted in favour, demonstrating confidence in the company's ability to rectify the situation and repay owed amounts. Through proactive measures, we have taken steps to address the impact, rebuild trust, and navigate challenging circumstances.”

The recovery process for Digital Surge post-crash presented “significant challenges”, but Rutter said they remained resilient and committed to overcoming them.

“One of the most surprising aspects of the recovery was the level of support and trust received from creditors, including our customers. This overwhelming support played a crucial role in the company's ability to move forward and rebuild,” he said.

“The recovery journey required meticulous planning, extensive collaboration with stakeholders, and a strong focus on implementing the necessary measures to regain trust and credibility.”

He also acknowledged his employees at Digital Surge, who he said were instrumental in navigating the complexities and working towards a positive outcome.

“Their unwavering determination to find a solution and fulfil their obligations to customers helped drive the recovery efforts forward,” he said.

Since the crash in November, Rutter said Digital Surge has been working “diligently” to recover and rebuild its operations.

In February 2023, Digital Surge reopened its platform for trading, deposits, and withdrawals.

“The company has made significant progress in fulfilling its obligations to customers and regaining trust within the industry,” he said.

Regulation needed

Since the crash, Rutter said this has highlighted the need for stronger regulation within the crypto industry.

“While cryptocurrencies offer exciting opportunities for innovation and financial inclusion, they also come with inherent risks that need to be addressed to ensure the stability and integrity of the market,” he said.

Rutter explained that the incident serves as a reminder that comprehensive regulatory frameworks are necessary to protect investors, mitigate systemic risks, and prevent potential fraudulent activities.

“Stronger regulation can provide clarity, transparency, and accountability within the industry, which in turn can foster trust and confidence among participants,” he said.

“Collaboration between industry participants, regulators, and policymakers is essential to develop effective regulatory frameworks that strike a balance between innovation and investor protection.”

Ongoing dialogue and information sharing can help regulators gain a deeper understanding of the crypto industry's dynamics and challenges, Rutter said.

“Enabling them to formulate appropriate regulations that address risks without stifling innovation,” he added.