Bankrupt exchange FTX plans to hire Galaxy to manage its crypto assets
Bankrupt cryptocurrency exchange FTX is seeking to hire Galaxy, led by Mike Novogratz, to assist with selling, staking, and hedging its crypto assets. The agreement would involve Galaxy managing and trading certain digital assets owned by FTX, converting them into fiat currency or stablecoins. Galaxy would also be responsible for hedging FTX’s exposure to volatile cryptocurrencies like Bitcoin and Ethereum. FTX’s decision to hire Galaxy is seen as beneficial due to Galaxy’s ability to sell significant cryptocurrency positions without impacting the market.
Main breakdown of key points:
- FTX plans to hire Galaxy to manage crypto assets
- Galaxy would handle selling, staking, and hedging of FTX’s assets
- Galaxy’s compensation would include a monthly management fee, hedging fee, and liquidation fee
- Galaxy’s confidential execution of trades would prevent unintended price movements
- The engagement with Galaxy requires court approval
Proposed guidelines to manage and sell digital assets
In a related motion, FTX is also seeking court approval for guidelines to manage and sell its digital asset holdings. The proposed guidelines would allow FTX to sell up to $100 million of digital assets weekly, with a temporary increase limit of $200 million. FTX believes that selling assets through an experienced investment manager like Galaxy would optimize sale proceeds and reduce exposure to market volatility. FTX also requests court approval to enter into hedging arrangements on eligible cryptocurrencies and stake idle crypto assets for passive yield.
Main breakdown of key points:
- FTX seeks court approval for guidelines to manage and sell digital assets
- Selling up to $100 million of assets weekly, with a temporary increase limit of $200 million
- FTX believes hiring an investment manager will optimize sale proceeds and minimize volatility
- FTX requests court approval for hedging arrangements and staking idle assets
- These measures are aimed at benefiting creditors by reducing market risk
Hot Take
FTX’s decision to hire Galaxy as an investment manager for its crypto assets shows the exchange’s commitment to monetizing its holdings and minimizing market risk. By engaging Galaxy, FTX can leverage Galaxy’s expertise in selling large cryptocurrency positions and benefit from confidential trade execution. The proposed guidelines for managing and selling digital assets further demonstrate FTX’s proactive approach to maximizing sale proceeds and mitigating volatility. If approved, this partnership with Galaxy could help FTX navigate its bankruptcy proceedings and provide value to both FTX and its creditors.
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