Rescue plan chases missing crypto millions

Account holders with a shuttered Australian cryptocurrency exchange will get a chance to recoup some of their "savings" under a proposed rescue plan.

Brisbane-based Digital Surge, caught in the bankruptcy saga of international crypto exchange FTX, went into voluntary administration last month and experts have examined what's left.

Administrators KordaMentha have drawn up a plan they say makes more sense than liquidating the company and will put it to creditors at a meeting on Tuesday.

"It is not in creditors' interests to wind up the company or to bring the administration to an end," administrators said in advice to creditors.

The preferred recapitalisation offer was received from major creditor Digico and the directors, the administrators' report said.

As expected, customer creditors with an account balance below $250 will be paid out in full as a priority.

Second in line are almost half (45 per cent) of customer creditors, who have a balance of $250 or above. Distributions to them over the next five years will depend on the company making a net profit on a quarterly basis.

The platform and its deep trading links with FTX allowed more than 30,000 customers to trade 300 different cryptocurrencies, but less than half of the $65 million in assets under management have been retrieved.

Administrators found the financial difficulties solely appeared to be the result of $33 million of company assets becoming unrecoverable due to the FTX collapse and not any breach of duties by directors. 

However, an employee withdrawal of $1.6 million in November "may warrant further investigation", administrators said.

A claim for the account holders' millions that Digital had on the FTX exchange has been lodged with United States lawyers.

But it could take years for those proceedings to conclude, administrators have warned.

Some $29.7 million in digital assets was safely moved to a custodian and insured, a meeting was told earlier this month.

Administrators also control $4.5 million in cash and no digital assets have been converted to cash so far.

Digital is owned by company directors Daniel Ritter (38.8 per cent) and Joshua Lehman (48.5 per cent), and two other shareholders Jozef Knaperek (9.7 per cent) and QUT Bluebox Pty Ltd (3 per cent).