Tens of thousands of Australians stung by the latest cryptocurrency exchange collapse could be waiting years to get their money back, if at all.
Almost $30 million in digital assets they thought was safely held in crypto wallets with Brisbane-based Digital Surge is caught up in the bankruptcy of global crypto exchange FTX.
Digital Surge had deep trading links with FTX and froze accounts in November to stave off its own bankruptcy before going into voluntary administration in December.
Trading remains suspended for the 62,000 user accounts but a bailout could be in the works with bids due by Monday.
Administrators have set themselves a two-week deadline to issue a report to explain the pros and cons of a possible rescue and restructure versus liquidation and distribution of remaining assets.
David Johnstone of KordaMentha told the first creditors meeting a vote on the future of Digital Surge would take place on January 24.
He said the company didn't appear to have any operational issues until the end of 2022, when it was caught up in the FTX collapse.
According to administrators, the company had $64.6 million in assets under management when it went into voluntary administration last month, including $28.6 million on the FTX exchange - mostly in the largest and most well-known cryptocurrencies Bitcoin and Ethereum.
Under administration, the cryptocurrencies on the digital books are considered company assets - not that of individuals - which makes account holders unsecured creditors.
However, Mr Johnstone said they have made a claim on behalf of Digital Surge to the lead bankruptcy lawyers handling FTX proceedings in the United States for the full amount.
"There is no indication that Digital Surge customer money was used or invested," Mr Johnstone told the online meeting on Thursday.
But he warned creditors it was going to take "months but more likely years" for the FTX proceedings to come to any conclusion.
In the meantime, $29.7 million in digital assets has been moved to ZeroCap, which he said was a reputable Australian exchange to use as a custodian and insurance had been obtained for those holdings.
Administrators also control $4.5 million in cash, but no digital assets have been converted to cash.
Digital Surge was founded in 2017 and offered access to more than 300 cryptocurrencies through its technology platform.
The private firm 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), administrators said.
The next FTX Australia creditors' meeting has been delayed for months as experts sift through the digital money trail - here and abroad.
Administrators KordaMentha are also in charge of the FTX Australia collapse.
Regulators remain concerned Australians mistakenly think they have the same protections when dabbling in crypto as when buying shares online.
Digital Surge did not hold an Australian Financial Services Licence and was not required to have one by law.
