Key takeaways:
- The remaining cryptocurrency holdings of the defunct cryptocurrency exchange FTX are expected to be managed by Mike Novogratz’s Galaxy Digital.
- To help the company maximize the value of its token portfolio, FTX plans to keep Galaxy Digital on as a registered investment adviser.
The remaining cryptocurrency holdings of the defunct cryptocurrency exchange FTX are expected to be managed by Mike Novogratz’s Galaxy Digital.
On August 24, the firm filed a motion with the United States District Court for the District of Delaware asking for permission and authorization of rules for the sale of digital assets collected during current bankruptcy proceedings.
The document details FTX’s petitions and plans to transfer almost $7 billion in recovered cryptocurrency tokens that Galaxy Digital would manage once the exchange collapsed in 2022.
As stated in its preliminary announcement, FTX aims to make provisions for the possible sale of its cryptocurrency assets and stake tokens through Galaxy Digital. The filing mentions a thorough “management and monetization plan” for its cryptocurrency assets to lessen exposure to volatility and future fiat repayments to creditors.
To help the company maximize the value of its token portfolio, FTX plans to keep Galaxy Digital on as a registered investment adviser and utilize its “specialized knowledge” of the markets for digital assets.
According to the corporation, the arrangement may have several advantages, including enabling it to sell its shares into the market anonymously and lowering the danger of market manipulation.
The overall investing criteria, according to FTX, require Galaxy Digital to hedge Bitcoin and Ether ahead of any potential sales and sell a variety of FTX-owned digital assets in the future.
To limit its exposure to market volatility, FTX will try to sell its crypto holdings for fiat while also taking advantage of liquid hedging markets for Bitcoin and Ether to protect against unforeseen price changes before their sale.
The filing also gives a reference to decentralized finance, with FTX stating that it wants to stake particular cryptocurrencies to produce passive yield income under the direction of Galaxy Digital:
“The debtors submit that staking certain digital assets pursuant to the staking method will inure to the benefit of the estate – and, ultimately, creditors – by generating low risk returns on their otherwise idle digital assets.”
FTX has released a proposed reorganization plan for restarting an offshore exchange while bankruptcy procedures are ongoing. As a result, creditors might have the choice of receiving a portion of their lost money or selecting a share of equity, tokens, or other interests in a relaunched FTX.
