Galaxy Digital, the digital asset management company led by Mike Novogratz, appears to be taking charge of the remaining cryptocurrency holdings of the bankrupt cryptocurrency exchange FTX.
On August 24, Galaxy Digital filed a motion in the US District Court for the District of Delaware, seeking authorization and approval for the sale of digital assets recovered during FTX's ongoing bankruptcy proceedings.
The filing outlines FTX's plans to transfer approximately $7 billion worth of recovered cryptocurrency tokens to Galaxy Digital's management. FTX aims to use Galaxy Digital's expertise to prepare for the potential sale of its cryptocurrency assets and equity tokens. The partner ship's goal is to implement a "comprehensive management and monetization plan" for these holdings, with the aim of reducing volatility and potential fiat repayment risks for creditors.
FTX intends to retain Galaxy Digital as a registered investment advisor to maximize the value of its token portfolio. This partnership offers advantages such as the ability to anonymously sell holdings in the market and mitigate the risk of market manipulation.
FTX acknowledges the expertise of investment advisors as crucial in assessing the timing, location, and counterparty of potential transactions. The collaboration allows Galaxy Digital to sell FTX's digital assets in the future and manage the hedging of Bitcoin and Ethereum before any pot essential sale.
In its strategy, FTX plans to sell cryptocurrency holdings for fiat currency to mitigate market volatility, using the liquidity of Bitcoin and Ether to hedge the market and reduce the risk of unexpected price fluctuations. The filing also mentions FTX's intention to participate in decentralized finance ( DeFi) activities by staking certain cryptocurrencies under the guidance of Galaxy Digital.
As the bankruptcy proceedings continue, FTX has submitted a proposed restructuring plan that hints at relaunching the offshore exchange. This plan could provide creditors with options to recover lost funds or share in equity, tokens, and other interests upon FTX's re start.
