FTX collapse sends shockwaves through other Australian businesses

Withdrawals now suspended at the Brisbane-based cryptocurrency exchange Digital Surge for more than a week

The collapse of the cryptocurrency exchange FTX continues to reverberate in Australia with customer withdrawals suspended at the Brisbane-based exchange Digital Surge for more than a week.

Close to 30,000 customers in Australia are believed to have been caught up in the collapse of FTX this month, but the flow-on effects are now being felt by other businesses.

Digital Surge – which allows customers to invest in cryptocurrency in Australia through multiple methods, including through their self-managed super funds – advised customers last week it was suspending deposits and withdrawals after the “greatly upsetting” news of FTX going into administration.

“Digital Surge operates as a broker and is committed to facilitating the best trade for our users at any time,” the company’s CEO, Dan Rutter, said.

“To do this, a portion of assets are held with trading partners to facilitate trades. FTX was one of those partners.”

Digital Surge said a portion of its assets were held by FTX in Australian dollars and digital assets. While the company said it had limited exposure, the investment meant it wasn’t able to operate “business as usual”.

“Until a permanent solution has been implemented, it is a legal requirement for Digital Surge to suspend all deposits and withdrawals. This is for the benefit of all users as a whole.”

Rutter indicated the company is still solvent but “due to our exposure to FTX, we are experiencing some short-term challenges with liquidity”.

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It has been over a week and customers are still unable to access their funds.

Digital Surge did not respond to questions about how many customers were affected and what exposure Digital Surge had to FTX.

This week the US-based crypto lender BlockFi filed for bankruptcy after FTX’s collapse triggered the equivalent of a bank run on BlockFi, which was seen as being too entangled with FTX.

Ahead of the first creditors meeting of FTX in Australia on Thursday, documents filed in the US bankruptcy court case reveal Australian law firm Piper Alderman is owed $48,608 by FTX, while Australian multinational law firm Herbert Smith Freehills is owed $120,304.

The Australian administrators last week met with those responsible for administrating the US companies in order to find out more information.

KordaMentha earlier said in an affidavit that it had discovered $42m in accounts associated with FTX in Australia. That included $39m in FTX Express – a second company established to allow cryptocurrency trading – and a further $3m in FTX Australia’s account.

  • Are you a customer of FTX or Digital Surge? We want to hear your story. Contact us at gaus.contact@protonmail.com

Contributor

Josh Taylor

The GuardianTramp

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