KordaMentha wins industry award for Digital Surge turnaround
The collapse of crypto exchange FTX took a number of other platforms down with it, but Australia’s Digital Surge survived the initial carnage thanks to the award-winning intervention of KordaMentha.
Turnaround & restructuring consultancy KordaMentha has won a ‘Blockie’ for most Outstanding Professional Services firm for its groundbreaking recovery of cryptocurrency platform Digital Surge, which got caught up in the high-profile collapse of FTX.
The engagement also previously earned the firm a 2023 small business Turnaround of the Year award from the Turnaround Management Association’s Australian chapter.
The sudden bankruptcy of global digital currency exchange FTX in November last year sent shock-waves across the worldwide crypto industry.
Based out of Brisbane, local exchange Digital Surge was among the international dominoes also forced into administration as a result, having stored half of its ~$65 million of assets under management in FTX just weeks prior to its collapse. Some 25,000 customers were left stuck when the platform ceased trading.
What followed is described as the world’s first successful turnaround of a cryptocurrency exchange, with all previous collapses resulting in liquidation. Led by partners Scott Langdon, David Johnstone, and John Mouawad, and executive director Paul Hewson, the KordaMentha team was able to secure payment in full for creditors owed less than $250 and a partial immediate return for the larger creditors with the potential for their full balance back over five years.
But the key was in redistributing the majority of returns in crypto rather than cash from sales, as requested by the customers, a move which would ultimately enable Digital Surge to continue to operate and grow post-administration with 70 percent of its base choosing to stick around.
To achieve this result, and due to the atypical nature of Digital Surge’s business, KordaMentha would be required to take a pioneering approach with a number of Australian firsts.
As an immediate priority upon being appointed administrator, the firm set out to secure and insure the remaining half of the assets, despite the $30 million worth of crypto being uninsurable through traditional means. KordaMentha was able to arrange a secure transfer deal with fellow Blockie award-winner Zerocap, later confirm ownership, and then redistribute the available digital assets with highly volatile value using Digital Surge’s existing blockchain technology.
KordaMentha says that one of the most critical aspects of the success was keeping the customers onside through clear and open communications between all parties, with Digital Surge co-founder Dan Rutter previously stating; “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.”
Issued by industry body Blockchain Australia, which is headed by former Infosys business development executive Simon Callaghan as CEO, the Australian Blockchain Awards have since 2019 celebrated individuals and organisations for their contributions to the development of the local ecosystem through technical innovation, new ideas, and community building. Melbourne-based Deloitte Digital partner Susan Brown was among this year’s judges.
