Innovative turnaround recognised at Blockchain Australia's awards
KordaMentha has been awarded a Blockie Award for Outstanding Professional Services in Australia's blockchain industry for its innovative and successful turnaround of cryptocurrency platform Digital Surge.
The nature of Digital Surge's business made its circumstances different from other organisations and required a pioneering approach. This led to a number of first in the Australian restructuring market.
In 2022, Digital Surge had ~$65 million AUM and offered ~300 cryptocurrencies to 60,000 customers. Holding half its assets with FTX just weeks before the US exchange's bankruptcy meant in November 2022, if 52% of Digital Surge's customers elected to cash out, the exchange would be unable to pay.
When KordaMentha was engaged as Administrator, the first priority was to secure and insure the remaining cryptocurrency. It was also important to engage with the platform's customers to discover what was most important to them. The answer to this question was that they wanted to receive their cryptocurrency back, rather than have the Administrators sell assets for cash. KordaMentha agreed a secure process using blockchain technology to rebalance then distribute the available digital assets to creditors, a first in the Australian restructuring industry.
The result was all employees retained, the exchange re-opened, and trade continued. 20,000 creditors owed less than $250 were paid in full, and remaining creditors receiving an initial 57c/$ crypto distribution with the balance to be paid in cash from company profits over five years, along with eventual proceeds from the FTX bankruptcy process.
The Digital Surge engagement also received the Turnaround Management Association Australia small business Turnaround of the Year 2023 award. More details of the turnaround are available here.